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Tech Mahindra Q1 Results Fy22-2023

25 July 2022

Tech Mahindra Ltd, a specialist in digital transformation, consulting and business re-engineering services, announced its financial results for Q1 FY23 on 25th July 2022.

Tech Mahindra reported its profit after tax (PAT) at Rs. 1,132 crores, down 16.4% Y-o-Y (year on year) from the Rs. 1,353 crores reported in the same quarter of the previous year. This is also a step-down on a sequential basis by nearly 25%, the company having reported PAT at Rs 1,505.6 crores in Q4 FY22. An increase in expenses on account of employee retention measures and transportation cost since offices opened up post covid, tailended by a decrease in other incomes may be the reasons behind the profit decline.  

Revenue from operations, however, came in at Rs. 12,708  crores, jumping 25% Y-o-Y against the Rs. 10,197.6 crores reported in Q1 FY22. EBIDTA was reported 0.2% higher at Rs 1,880 crore, but on a sequential basis, it is down 10% from the Rs. 2088.4 crores announced in the previous quarter. 

On a constant currency basis, revenue was reported at $1,632 million, 18% higher on a Y-o-Y basis and 1.5% higher on a Q-o-Q basis. Tech Mahindra also registered $802 million worth of net new clients in the quarter. FCF of the company came in at $72 million. 

Despite efforts towards employee retention, attrition continues to plague all IT companies. Attrition at Tech M jumped 4% from 17% last year to 22% in Q1 FY23. Meanwhile, total headcount was published at 158,035, higher by 25% Y-o-Y from 126,263.

Earnings-per-share (basic) for Tech Mahindra was published at Rs. 12.84, down 25% from Rs. 17.09 Q-o-Q. Tech Mahindra script was down 1.11% on the indices, trading at Rs. 1,014. 

Segment-wise revenue of Tech Mahindra Q1 Results

  • IT - Revenue was published at Rs.11,101 crores, rising 23% higher than Rs. 9015.8 crores from last year
  • BPO - Revenue was recorded at Rs. 1,606.4 crores, rising 36% from Rs. 1,181.8 crores Y-o-Y

Hits of Tech Mahindra Results

  • Revenue came in at Rs. 12,708 crores; up 4.9% Q-o-Q and 24,6% Y-o-Y
  • EBITDA was published at Rs. 1,880 crores, up 0.2% Y-o-Y
  • Revenue in CC was 1.5% and 18% higher on a quarterly and yearly basis, respectively
  • Tech Mahindra clocked in $802 million worth of net client win
  • Cash and cash equivalent came in at $1,114 million for the quarter ended June 

Misses of Tech Mahindra Quarterly Results

  • Consolidated PAT was recorded at Rs. 1,132 crores; down 24.8% Q-o-Q and down 16.4% Y-o-Y
  • EBITDA was down 10% to Rs. 1880 crores from Rs. Rs. 2088.4 crores Q-o-Q
  • Profit after tax (PAT) in USD terms was recorded at $143 million, down 28.0% Q-o-Q and down 22% Y-o-Y

From the management

CP Gurnoni, Managing Director & Chief Executive Officer, Tech Mahindra, said, We are starting this fiscal with a renewed commitment towards delivering consistent organic growth. We remain resilient and watchful given the dynamic global macro-economic environment and will continue to invest in new and emerging technologies to deliver differentiated offerings. Our winning strategy rests on the pillars — ‘Purpose, People and Performance’ which is aiding us to responsibly capitalise on the strong demand environment in the market.”

Adding further, Rohit Anand, Chief Financial Officer, Tech Mahindra, said, “Delivery transformation, cost optimisation and cash conversion will be key focus areas as we continue to offset the strong supply side headwinds in the market. We aim to expand our profitability through operational excellence and improved operating metrics over the course of FY’23.”

In the news 

  • Tech Mahindra was chosen by one of the largest telecom operators in Africa as the preferred partner for transitioning to Next Generation Digital IT Operations, including infrastructure support and managed services.
  • The company has been chosen by a telecom giant in the US to scale its operations through the jointly co-creation of a captive centre for 355 & 055 operations enabling the Telecom IT talent build-out for 5G and wireless technologies.
  • Makers LabTM, the R&D arm of Tech Mahindra, launched the first-of-its-kind ‘Meta Village’, a digital twin of Pargaon in Maharashtra, to gamify learning on the Roblox platform. 
  • Tech Mahindra has collaborated with Microsoft to build SenTindra, a cloud-based virtual security operations centre developed on Microsoft Sentinel. 
  • The company announced a collaboration with Keysight Technologies to certify 56 equipment in its 56 0-RAN test lab facility in New Jersey. 
  • Tech Mahindra has expanded its collaboration with Pegasystems driving innovative industry solutions that will help accelerate the digital transformation of customers. 
  • The company has announced a partnership with Amesto Aces AS to provide trained & certified salesforce resources and deep industry expertise to its customers across Europe, 
  • The International Chess Federation and All India Chess federation strengthen their partnership with Tech Mahindra to provide a next-generation digital fan experience by leveraging Fan Nxt.
  • Tech Mahindra’s CEO & MD, Mr. CP Gurnani, has been recognised as Outstanding Business Leader by CEO Forum India at the 2nd Raymond CEO Forum Awards Night 2022
  • Marksmen Daily, in association with India Today, recognised Tech Mahindra as one of the ‘Most Preferred Workplace 2022’.
  • Dun & Bradstreet India recognised Tech Mahindra as a top performer in the ESG Performance — Software and BPM sector
  • Tech Mahindra was ranked 2nd amongst the Top 35 companies in Businessworld India’s Most Sustainable Companies 2022 in this year’s “The Sustainable World 2022 Summit” organised by Business World.

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Research Analyst: Bavadharini KS

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