Tech Mahindra Q1 profit rises 1% to Rs 972 crore, revenue up 5%

Tech Mahindra, a subsidiary of the Mahindra Group, on Monday reported 1.36 per cent year-on-year (YoY) rise in consolidated net profit at Rs 972.30 crore for the first quarter ended June 30, as against Rs 959.30 crore in the same period last year. On quarter-on-quarter (QoQ) basis, the profit rose 20.94 per cent from Rs 803.90 crore in March quarter of FY20.

The Pune-headquartered company's consolidated revenue from operations increased 5.23 per cent on annual basis to Rs 9,106.3 crore in Q1 FY21 as compared to Rs 8,653 crore in Q1 FY20. On sequential basis, the consolidated revenue from operations fell 4 per cent from Rs 9,490.2 crore in Q4 FY20.

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In dollar terms, Tech Mahindra's net profit rose 18.2 per cent QoQ to $128.8 million, while revenues were down 6.7 per cent to $1,207.5 million during the June quarter of this fiscal over the March quarter, Tech Mahindra said in a filing to the Bombay Stock Exchange.

Commenting on Q1 earnings, CP Gurnani, Managing Director and Chief Executive Officer, Tech Mahindra, said, "We are witnessing a wave of new age technologies being adopted by the customers as businesses across the globe are actively pursuing digital transformation. We are well positioned to capture such spends and our endeavour is to be back on the growth path amid increased signs of demand normalisation."

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At the operating front, EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) declined 3.5 per cent quarter-on-quarter to Rs 1,301 crore, but margin grew by 10 bps to 14.3 per cent.

During the quarter under review, Tech Mahindra's active client base stood at 981, while it added eight new clients during April-June period.

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The information technology services provider had 1,23,416 employees as of June 30, 2020, down 1,820 compared to March 2020.

"Despite demand uncertainty and volume reduction, we have been able to demonstrate operational resilience through cost optimisation. Cash conversion has been strong, while we aim to improve profitability margins as demand normalises," said Manoj Bhat, Chief Financial Officer, Tech Mahindra, said.

Ahead of Q1 earnings announcement, shares of Tech Mahindra settled at Rs 664.05, up 1.73 per cent, against the previous closing price of Rs 652.75 on the BSE on Monday.