Tech Mahindra net profit up 27 pct in quarter at Rs 686 cr

Written by Press Trust of India | Mumbai | Updated: Aug 13 2013, 01:35am hrs
Tech Mahindra
Software major Tech Mahindra Ltd today reported 27 per cent jump in consolidated net profit at Rs 686.3 crore for the quarter ended June 30, 2013, on the back of growth across verticals like manufacturing and media & entertainment.

The company's net profit stood at Rs 540.5 crore in the same period last year.

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Tech Mahindra, in June, completed the merger of Mahindra Satyam (Satyam Computer Services Ltd) with itself to create the country's fifth largest software services firm.

Tech Mahindra, part of the Mahindra and Mahindra Group, saw revenues at Rs 4,103.2 crore in April-June period, up 21.7 per cent as compared to Rs 3,372.7 crore in the same quarter of previous fiscal.

"It gives me immense pleasure to announce the first set of numbers of the merged entity incorporating the results of Tech Mahindra and what was formally called Satyam Computers... Our robust performance reinforces our belief in the inherent strength and cross leveraging possibilities," Tech Mahindra Executive Vice Chairman Vineet Nayyar told reporters here.

The results are in line with the performance of larger rivals like TCS and HCL Technologies, who have posted strong quarterly numbers on the back of revival in demand for outsourcing services in the US and European markets.

On sequential basis, Tech Mahindra's consolidated net profit was up 36.2 per cent (before exceptional reversal of impairment provision) as the same stood at Rs 637.7 crore in the January-March 2013 quarter.

In USD terms, revenues stood at USD 724 million (up 17.7 per cent year-on-year), while net profit was at USD 121 million (up 22.3 per cent y-o-y).

On the client side, Tech Mahindra said its active client count at 567 in the first quarter of FY 2014 as against 516 in the fourth quarter of FY 2013.

"We have had good growth led by manufacturing, which is our second largest vertical after telecom, at 5.7 per cent growth quarter-on-quarter. Media and entertainment grew 8.7 per cent, while retail is up 6.1 per cent q-o-q. Telecom, despite of the major accounts not growing as fast, is still growing at 2.5 per cent q-o-q," Tech Mahindra Managing Director C P Gurnani said.

Talking about the US market, Nayyar said, "Green shoots are visible and palpable and order-book is improving".

"Europe continues to be a cause of concern but the worry pertaining to an impending economic crisis has receded dramatically," he added.

Nayyar said while the fundamentals in the European market are still not strong, Tech Mahindra sees a lot of opportunities as "increasingly the walls, which did not encourage external agencies to function there, are coming down."

Stating that the Rest of World market was moderately positive, Nayyar said it expects moderate growth in revenue this year and continuing "to sustain profitability of the company at the current levels."

Tech Mahindra's margins in the quarter saw a 130 basis points impact because of currency depreciation, while visa-related costs had a 80 bps impact.

The company's total headcount stood at 83,063 for the quarter ended June 30, 2013, of which software professionals accounted for 53,337, BPO at 23,269 and support staff at 6,457.

Asked about wage hikes, Gurnani said the company's salary hikes would be effective January 1, and the impact of the same will be seen in the January-March quarter numbers.

"They will be to the tune of eight per cent...the reason for the wage hike from January 1 is that our HR policies are being synchronised between the two companies," he added.

Tech Mahindra's cash and cash equivalents stood at Rs 3,655 crore as of June 30, 2013.

Shares of the company closed at Rs 1,265.80 apiece, up 1.71 per cent from previous close on the BSE.