Tech Mahindra profit up 27% at R686 crore

Written by fe Bureau | Mumbai | Updated: Aug 13 2013, 08:11am hrs
Mahindra groups IT arm Tech Mahindra on Monday posted a 27% increase in net profit at R686.3 crore during the April-June quarter against last years R540.5 crore during the same period.

This is the first time that Tech Mahindra has reported consolidated financial numbers after its merger with Satyam Computer Services on June 24, 2013. The companys net revenues during the period increased 21.66% to R4,103.2 crore . Tech Mahindras operating profit for the quarter under review stood at R864.5 crore as against R739.2 crore in the same period last year.

The companys Ebitda margin for the quarter stood at 21% compared to 21.9% in the same period last year. The company had a positive impact of 1.3% on its margin this quarter due to the rupee depreciation and a negative impact of 0.8% due to the H1B visas. The company has seen forex gains of $24 million for the quarter. It applied for 1,300 H1B visas this quarter against 1,000 visas in the same period last year.

Tech Mahindra witnessed volume growth of 4.4% sequentially. The macro-economic conditions are good going forward. We look forward to moderate growth and hope to maintain the current levels, Nayyar said. The company has a debt of R747 crore as of June 30, 2013. Tech Mahindras cash and cash equivalents stand at R3,655 crore as of June 30, 2013.

It has been a great performance in dollar and rupee terms. The company is inching towards a $3-billion entity. We continue to show steady progress in our cash reserves and profitability, CP Gurnani, managing director and CEO, said. The day from the date of announcement of merger and now, the overall mood of employees, customers and investors community is positive, he said.

Europe witnessed flat growth of 1.1% this quarter while the US witnessed growth of 11.4%. The US is increasingly looking good. Green shoots are visible and palpable. And the order book is improving in this continent. Europe continues to be a cause of concern. But the worry pertaining to an economic crisis is reducing. Consequently, in the heel of this economic stagnation, we are suddenly seeing a range of opportunity, Nayyar said.

The company is now targeting markets like Australia and New Zealand. But it not very positive on British Telecom contribution. BT is not growing but the share of the wallet is growing for us, Nayyar said. British Telecom contributed 12% to Tech Mahindras revenues.

The company is relooking at its hedging strategy. Clearly, the impact of rupee depreciation is positive. The prices will start reflecting the depreciation soon but more than 50% of our expenditure is in the form of foreign exchange, says Milind Kulkarni, chief financial officer at Tech Mahindra. Earlier, it was long-term hedging but now we have decided to go slow on it, he added. It is not exactly an ideal state to see rupee volatility because inflation also counters in, said Gurnani.