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Q2 Results: Tech Mahindra’s Profit Beats Estimates Aided By Deal Wins, Lower Taxes

Net profit rose 17.2 percent sequentially to 1,123.9 crore.

Tech Mahindra’s Hyderabad campus. (Photographer: Dhiraj Singh/Bloomberg)
Tech Mahindra’s Hyderabad campus. (Photographer: Dhiraj Singh/Bloomberg)

Tech Mahindra Ltd.’s quarterly profit beat analysts’ estimates aided by lower tax expense and record deal wins.

Net profit rose 17.2 percent sequentially to 1,123.9 crore in the quarter ended September, according to the company’s exchange filing. Analyst estimates tracked by Bloomberg had pegged profit much lower at Rs 940 crore.

  • Revenue rose 4.8 percent quarter-on-quarter to Rs 9,069.9 crore.
  • Dollar revenue rose 3.2 percent to $1,287.2 million—largely in line with estimates.
  • Operating profit rose 16.8 percent to Rs 1,159.4 crore.
  • Margin expanded 130 basis points to 12.8 percent.
  • Tech Mahindra’s tax expenses fell 31.7 percent over the previous Rs 2,265 crore.

“We have witnessed a broad-based growth across geographies and across our customers,” Manoj Bhat, the company’s chief financial officer, was quoted as saying in a media statement. “We continue to focus on margin improvement while transitioning some of the large deals in a volatile macro economic environment.”

Deal wins were particularly strong for the Mumbai-based software services firm. They rose to a record of $1.49 billion during the July-September quarter, according to its media statement. That included a multi-year agreement with U.S. telecom giant AT&T Inc. for network transformation and migrating to the cloud.

Still, global headwinds shroud the future for Indian IT companies. A deepening economic slowdown in Europe, greater Brexit-related uncertainty and increased trade tensions between the U.S. and China could result in slower sales growth as clients delay spending. Research firm Gartner expects the risk of an economic downturn “high enough” to warrant preparation and planning.

Separately, the company announced its $95-million acquisition of BORN Group in the U.S. to boost its commerce and customer experience capabilities.

Shares of Tech Mahindra closed 0.5 percent higher ahead of the earnings announcement, while the benchmark Nifty 50 index closed 0.2 percent lower.

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