Tech Mahindra posted a net profit of Rs 1,250 crore, up by 153.1 percent on a year-on-year (YoY) basis, beating Street estimates for the second quarter ended September 30, 2024. The significant jump in profit came from a one-time special income from sale of assets.
According to company filings, it saw a gain on sale of property of Rs. 450.2 crores, which included a freehold land and its related buildings along with the furniture & fixtures sold for a consideration of Rs. 535 crores. This will be received over a period of 4 years along with interest of 8.2% per annum.
Overall, this is still a significant improvement coming amidst the company’s ongoing business restructuring under the new management led by CEO and MD Mohit Joshi.
Sequentially, net profit grew by 46.8 percent. Consolidated revenue for the quarter stood at Rs 13,313 crore, growing by 3.5 percent YoY and 2.4 percent QoQ, beating Street estimates.
EBIT margin for the quarter stood at 9.6 percent, a 110 bps improvement from 8.5 percent last quarter.
According to Moneycontrol Poll of 11 brokerages, Tech Mahindra's revenue was expected to rise by 1.3 percent quarter-on-quarter to Rs 13,171 crore, while net profit was estimated to jump 21.7 percent QoQ to Rs 1,036 crore. EBIT margin was pegged at 9.2 percent, growing 70 bps QoQ.
Deal total contract value (TCV) for Q2 stood at $603 million, an increase from $534 million in the previous quarter.
Tech Mahindra declared an interim dividend of Rs 15 per share. The company has fixed November 1, 2024, as the record date for determining the members entitled to receive the Interim dividend.
Joshi said, “We continue to progress on our strategic improvement efforts even as the overall IT services industry has remained soft. We have focused on strengthening client relationships and expanding the partner ecosystem while maintaining a sharp focus on operational excellence through project Fortius, which has resulted in an expansion of margins for the third sequential quarter.”
Rohit Anand, Chief Financial Officer, Tech Mahindra, said, “This quarter we see consistent performance around increasing deal wins, revenue growth, cost optimization and steady free cashflow generation as we continue our journey towards FY27 stated targets. In line with our capital allocation policy the board has declared an interim dividend of Rs. 15 per share.”
The company's headcount went up by 6,653 sequentially and 3,669 YoY. Total headcount stood at 154,273.
Attrition on last-twelve month (LTM) basis increased to 10.6 percent, up from 10 percent in Q1.
On October 18, Tech Mahindra's shares on BSE closed 0.68 percent lower at Rs 1,688 apiece.
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