IT services major Tech Mahindra reported a 40.9 percent fall in net profit to Rs 661 crores year-on-year for the fourth quarter ended March 31, driven by continued slowdown key verticals including telecom, communications, media and entertainment.
Sequentially, net profit was up by 29.5 percent. Net profit was below Moneycontrol’s estimate of touching Rs 709.47 crore in Q4.
Consolidated revenue for Q4FY24 decreased 6.2 percent YoY at Rs 12,871 crore, below Moneycontrol’s estimate of Rs 12,926 crore.
On a QoQ basis, revenue was down by 1.8 percent.
The company’s EBIT margin or operating margin came in at 7.4 percent, which is an improvement from the previous quarter’s 5.4 percent. This was above Moneycontrol’s estimate of 7.02 percent.
Full year FY24 revenue came in at Rs 51,996 crore, decreasing by 2.4 percent YoY and net profit stood at Rs 2,358 crores, down by 51.2 percent YoY.
The board recommended a final Dividend of Rs. 28/- per equity share of the face value of Rs. 5/- each (560%) for the financial year ended 31st March, 2024.
Mohit Joshi, CEO, Tech Mahindra said, "As we step into FY25, we look forward to improvement in clients spending, which fuels our optimism for a better revenue performance ahead. Our unique ability to enable customers with transformative scale at unparalleled speed, differentiates us from competitors."
"FY24 posed its fair share of challenges for the IT services sector; yet, amidst the global economic uncertainties, we continue to observe a notable
push towards digital adoption," he added.
Deal wins and FY25 outlook
Tech Mahindra's deal win total contract value (TCV) for FY24 came in at $1.9 billion. TCV for Q4 stood at $500 million.
Joshi expects FY25 will be better than the previous year.
"In a world of heightened geopolitical turmoil, coupled with fast evolving AI capabilities, organisations will either have to address, adapt and insulate their businesses like never before. They will thus turn to partners like Tech Mahindra, who can help them transform at speed and bring agility resilience and efficiency to their businesses," he said during the Q4 earnings conference on April 25.
He added, "Q4 marks the lowest point of our journey, we start turning around from Q1 onwards."
Tech Mahindra saw a 16.5 percent YoY decline in the CME business in Q4, which accounts for nearly 40 percent of its revenue. BFSI was down by 4.8 percent YoY, technology degrew by 3 percent YoY, and retail, transport and logistics declined by 3.1 percent YoY. Only manufacturing segment saw growth of around 6.2 percent YoY.
"This quarter large deals increased to $500 million. This was due to a couple of large deals of over $100 million we won this quarter, deals wins were broad based," said Rohit Anand, CFO, Tech Mahindra.
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