TechM net profit up 39%; revenue zooms 12k cr

Hyderabad IT services provider Tech Mahindra on Friday reported a 39 per cent jump in its consolidated net profit for March 2022 quarter at Rs 1,678.4 crore, and exuded confidence that the positive business momentum will continue in the current fiscal.

On a standalone basis, the Mahindra group company reported a post-tax profit at Rs 1,505 crore in the quarter under review as against Rs 1,081 crore a year ago. The fifth-largest IT services company closed FY22 with a standalone profit of Rs 5,566 crore as against Rs 4,428 crore in FY21.

Revenue from operations grew to Rs 12,116 crore during the reporting quarter as against Rs 9,729 crore in the year-ago period, while forex increase helped in a gain on the company's other income which stood at Rs 320 crore as against Rs 32.6 crore. The company closed the quarter with a total contract value of $1 billion and the fiscal with $3 billion in the new deals.

Wins during the quarter included a 5G operator in Europe and others in areas like retail and healthcare, company officials said. Its managing director and chief executive C P Gurnani said he is "lot confident" about the business momentum continuing in FY23 as well. Its president for corporate strategy Vivek Agarwal said the company expects its mainstay of communications, media and entertainment, and also the upcoming metaverse offerings are gaining traction in the new fiscal.

Agarwal added that the demand environment is robust and there has not been any impact of the geopolitical tensions triggered by the Russian invasion of Ukraine or other developments like the runaway inflation in the US. Chief financial officer-designate Rohit Anand said the company hired 10,000 freshers in FY22, and will continue to hire with a mix of fresher and lateral workforce.

The total workforce stood at 1.51 lakh. With supply side issues on the mind, the company gave out more than one appraisal to the employees and the average salary hike stood at 10 per cent, Gurnani said.

Tech Mahindra's chief financial officer Milind Kulkarni said the operating profit margin came at 17.2 per cent as against 20 per cent in the year-ago period, and 18 per cent in the quarter-ago period.

This was majorly impacted by lower utilisation levels and also supply side issues like additional pay hikes and retention money to be paid to staff, he said. The profit line got benefited through a decline in tax rate to over 17 per cent as against 27 per cent, Kulkarni said.

The tax expense stood at Rs 136 crore in the reporting quarter as against 511 crore in the year-ago period. The company has committed $900 million for acquisitions in FY22, and will be focusing on integrating the companies taken over in the last 18 months in FY23, Agarwal said. On Friday, Tech Mahindra scrip closed 0.93 per cent lower at Rs 1,202.30 a piece on the BSE as against a correction of 0.26 per cent in the benchmark index.