Tech Mahindra Q2 Results: Profit declines 61% to Rs 505 crore

Tech Mahindra Q2 Results: IT company Tech Mahindra posted a 61 per cent decline in consolidated net profit to Rs 505.3 crore in the July-September quarter mainly on account of reduced spending by clients.

The company had registered a net profit of Rs 1,299.2 crore in the year-ago period, according to a regulatory filing. Pic: Reuters

Tech Mahindra Q2 Results: IT company Tech Mahindra posted a 61 per cent decline in consolidated net profit to Rs 505.3 crore in the July-September quarter mainly on account of reduced spending by clients.

The company had registered a net profit of Rs 1,299.2 crore in the year-ago period, according to a regulatory filing.

The consolidated revenue from operations of the company declined by 2 per cent to Rs 12,864 crore during the reported quarter from Rs 13,129.5 crore in the September 2022 quarter.

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Tech Mahindra Chief Executive Officer and Managing Director CP Gurnani, in his last earnings call, said that the last few quarters have been the most difficult ones among the ups and downs he has seen throughout his career.

One of the longest-serving chief executive officers in the Indian IT sector, Gurnani said he believed that in terms of market timing and service offerings, the company was poised to ride some of the technology investments, particularly 5G.

"I don't think wave was strong enough for 5G. Some of our customers had to stop or reduce their capital expenditure because their operating costs became very high. Many of the corporations borrow money and with a rising interest cost, we found some of our customers in little more difficulty that I hadn't anticipated," Gurnani said.

Tech Mahindra posted the highest decline of 11.5 per cent in the communications, media and entertainment vertical on a year-on-year basis followed by a 6.3 per cent dip in the banking, financial services and insurance business, 4.6 per cent in the retail, transport and logistics vertical.

Europe business of Tech Mahindra declined by 8.6 per cent, America's by half a per cent and rest of the world by 11 per cent.

While the total contract value of new deal wins increased by 78 per cent on a quarter-over-quarter basis to about Rs 5,300 crore (USD 640 million) from Rs 2,980 crore in the June quarter but it was down 10 per cent on a YoY (Year-on-Year) basis.

The total headcount of the company dropped by 8.1 per cent to 1,50,604 during the reported quarter from 1,63,912 a year ago.

The attrition rate at the company almost halved to 11 per cent from 20 per cent on a YoY basis.

Tech Mahindra is evaluating exit from some of the businesses to enhance operational efficiencies.

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