With a challenging macroeconomic landscape and Tech Mahindra’s washout earnings in the June quarter, CEO and MD designate Mohit Joshi is in for an uphill task as he preps to take over. He remains confident that despite the Q1 numbers, the IT services firm will do well in the medium to long term.
Joshi is set to take up the top job after present CEO and MD CP Gurnani retires on December 19. As of now, Joshi has joined as a senior board member of the company and along with Gurnani, has been meeting clients and employees across Tech Mahindra’s centres in India and abroad in the past 4-6 weeks.
Speaking at his first earnings conference, and during a quarter which Gurnani called as Tech Mahindra’s ‘toughest quarter in the last five years’, Joshi said: “We have had a challenging set of results, but going forward, in the time I have spent with the company I am confident about our medium and long-term growth. This will be based on the really strong and robust platform that we will work to build on as CP and I work over the transition over the next few months.”
“With the opportunity I had to meet our clients around the world and get an early sense of our service lines, I am enthused by the depth of the client connect – in many cases these are relationships that span multiple decades. There’s a deep sense of business value that Tech Mahindra has given to these clients. Several clients have spoken about that we have been an integral part of their transformation journey and will continue to be so in the future,” he added.
In Q1FY24, Tech Mahindra’s performance was largely hit due to the slowdown and decline in its single-biggest vertical, communications, entertainment and media (CME), which accounts for nearly 40 percent of the company’s revenue, due to its Comviva business facing seasonality. Though most other verticals also remained tepid to negative, CME was the worst performing.
Gurnani said that under Joshi’s leadership, the company will also attempt to reduce revenue weightage on CME to win more deals in the BFSI, healthcare and other non-CME verticals, which is Joshi’s area of expertise.
But that doesn’t mean the company would do away with its emerging technology segments it has been known for. Joshi said, “I am also struck by the investments we have made in creating and incubating our service lines, working closely with our ecosystem partners on technologies like AI, data analytics etc. the service lines are truly cutting edge. I am confident that as we move forward, this will continue.”
Joshi is an Infosys veteran with over 22 years of experience with expertise in banking financial services and insurance (BFSI) and healthcare verticals. In his previous role, he was involved in executing Infosys’ overall transformation as part of its leadership team over the past few years.
According to industry analysts, this will help with diversifying Tech Mahindra’s deal win strategy and help them win large deals -- deals that usually go to the top two or three companies like Tata Consultancy Services (TCS) and Infosys.
Tech Mahindra announced its Q1FY24 results on July 26. Net profit declined 38 percent YoY, which stood at Rs 692.5 crore in Q1, as compared to the same quarter in the last fiscal year. Sequentially too, net profit was down by over 38 percent.
Consolidated revenue for Q1FY24 stood at Rs 13,159 crore, growing 3.5 percent YoY, but it was down by 4.1 percent on a QoQ basis.
Tech Mahindra's Q1 order book declined over 39 percent QoQ to $359 million from $592 million in the previous quarter. It plunged around 55 percent YoY.
EBIT margin too was a major miss at 6.8 percent as compared to analyst estimates. It was down from 11.2 percent last quarter. Net headcount addition for the quarter was down by 4,103.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
