IT services major Tech Mahindra on Tuesday reported a 13.6% sequential rise in its net profit at Rs 1,285 crore in the September quarter. The profit came in above the Bloomberg estimates of Rs 1,212.50 crore.

On a year-on-year basis, however, the company’s net profit declined 4% from Rs 1,339 crore in the same period last year due to cost inflation and supply side pressures in the last 12 months.

The Pune-headquartered company’s revenue for the September quarter grew 20.7% from a year ago and 3.3% sequentially to Rs 13,129 crore on the back of broad-based growth, in line with the consensus estimates of Rs 13,166 crore. The dollar revenue for the quarter grew 2.9% quarter-on-quarter in constant currency to $1.64 billion, driven by broad-based growth across sectors.

“We continue to focus on being resilient and agile to ensure long-term value for our people, customers, partners, and the society at large. While market conditions evolve and supply-side challenges continue, we will strengthen our differentiated offerings to help customers in their transformation journey through our integrated and new-age solutions,” CP Gurnani, managing director and chief executive officer, Tech Mahindra, said.

Tech Mahindra’s large deals pipeline remains “robust” and “better than ever”, driven by transformation initiatives of clients related to 5G, Gurnani told reporters on the sidelines of the earnings conference.

Indian IT companies reported robust earnings during the pandemic as the demand for digital soared. But the peak revenue growth is likely to be behind them and the momentum is seen softening from H2FY23 on account of absence of large deal wins and clients postponing their technology spends. Margins are under pressure due to wage hikes, higher backfilling costs, and increase in travel, visa and other discretionary expenses.

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Tech Mahindra’s Ebitda margin for the second quarter narrowed to 15.1% from 18.3% in the year-ago quarter as various costs related to travel and employees increased. On a sequential basis, however, operating margins improved from 14.8% reported in the June quarter due to depreciation in the rupee and other operating efficiencies.

On a trailing 12-month basis, the attrition rate during Q2 reduced to 20% from 21% in the year-ago period and 22% in the June quarter, indicating a gradual decline in attrition. The company’s employee count was up 3.7% q-o-q, taking the total headcount to 163,912.

Ahead of its results, the company’s shares closed up 0.77% at Rs 1,071.65 on the BSE.