Q2 Results: Tech Mahindra Meets Estimates On Higher Margins

Tech Mahindra Ltd.’s quarterly profit growth met estimates backed by higher margins.

Net profit rose 18.5 percent quarter-on-quarter to Rs 1,064.3 crore for the quarter ended September, the company said in an exchange filing today. That compares with the Bloomberg consensus estimate of Rs 1,013 crore.

Revenue rose 4.3 percent on a sequential basis to Rs 8,629.8 crore during the three-month period. That was also above the Rs 8,609 crore forecast. Revenue in dollar terms fell 0.5 percent from the last quarter to $1,218 million.

On a sequential basis, the company’s operating margin rose 240 basis points to 15.3 percent. The company’s cross-currency benefit saw a 80-basis point improvement while the absence of visa costs added added 60 basis points to the company’s operating margin in the second quarter, the company’s Chief Financial Officer Manoj Bhat said. “The balance of 140 basis points came from operational improvement, mixed changes in the business, in addition to the wage hike.”

The earnings before interest and tax rose 23.1 percent quarter-on-quarter to Rs 1,324.2 crore. Bhat expects the company’s margins to gradually improve over the next two quarters. “We believe that our journey of Ebitda improvement is driven by fundamental changes in terms of automation, new-age deliveries, managing synergy and yields in a better way.”

Shares of the tech company rose 3.1 percent to Rs 685 ahead of the results announcement.