Tech Mahindra posted an 18.7% sequential increase in net profit for the fiscal fourth quarter at Rs 1, 167 crore, the Mumbai-based tech major announced on Thursday. The net profit came in ahead of Bloomberg estimates of Rs 1, 081 crore.
Revenue for the quarter under consideration was up 0.7% at Rs 13, 384 crore, on-quarter trailing Bloomberg estimates of Rs 13, 459 crore. The firm also trailed street estimates on earnings before interest, taxation, depreciation and amortisation (Ebitda) of Rs 1, 874 crore at Rs 1, 867 crore. Ebitda was up 3.2% quarter on quarter.
Revenues for the fourth quarter were impacted by delays in decision making, Tech Mahindra’s managing director and chief executive, Mohit Joshi, said. “There was one major deal in the US which saw a delay in renewal,” he added.
The management attributed Ebitda and profit growth to efforts towards operational efficiency undertaken during the quarter.
“Profit has grown partly due to the EBIT improvement of 40 basis points quarter on quarter, even after the impact of wage hikes. We also saw some one-time gains, which have helped with ETR (effective tax rate), which is at 22%,” Rohit Anand, chief financial officer, Tech Mahindra, said.
The company also saw a reduction in the number of active clients to 1,162 in Q4FY25 compared to 1,175 in the preceding quarter and 1,172 in the fourth quarter of FY24. This, Anand explained, was because of the firm’s efforts towards margin growth. “We have shifted focus to long-term strategic clients,” he said.
He added that the firm saw a 60% increase in operating profit through operational leverage and cost management.
“We raised our dividend per share by 12.5% and returned 85% of our free cash flow to shareholders, reflecting our commitment to capital allocation policy,” he said.
The firm said that while macroeconomic headwinds on account of tariff tensions may impact revenue visibility for now, it maintains its margin ambitions of 15% for FY26.
The firm’s total new deals in the quarter amounted to $798 million, up from $745 million in Q3 and $500 million a year prior.
“Our deal wins at $2.7 billion reflect a 42% year-on-year increase and are a clear validation of the depth of our client partnerships,” Joshi added.
On a full fiscal basis, the firm’s revenue grew 1.9% year-on-year to Rs 52,988 crore. Ebitda grew to Rs 6,991 crore, while PAT grew to Rs 4,252 crore, up 80.3% year on year, bolstered by a significant reduction in cost on account of impairment of goodwill and non-current assets.
Employee metrics
During the quarter, the firm’s headcount declined by 1.2% sequentially to reach 148,731 at March end. On an annual basis, the company headcount grew 2.3% compared to 145,455 at the end of FY24.
Tech Mahindra’s utilisation rate was constant sequentially at 86%, though attrition increased to 11% (Q3: 10%).
The firm had said it would hire 6,000 graduates in FY25, and ended the year with 6100 graduates. However, uncertainties arising due to the recent global tariff tensions could also impact hiring strategies for FY26, the management said.
“The quantum of hiring in the current year will depend on demand visibility, which is a bit muddy right now. We expect it will improve (down the line),” Joshi said.
Industry-wise performance
Communications continued to be the largest vertical by revenue with a contribution of 33.2%, followed by manufacturing at 17%. BFSI accounted for 16.7% while hi-tech and media accounted for 13.2% of the revenue.
Only two verticals showed growth in the quarter – communications (1%) and banking and financial services (BFSI; 2.4%). Manufacturing was down 0.2% during the quarter, while healthcare was down 5.6%. the biggest dip came in the hi-tech and media vertical, which was down 8.2 per cent.
For the full fiscal, retail, transport and logistics registered 10.3% growth (down 0.4% q-o-q), and BFSI grew 6%. Manufacturing, hi-tech and media, and communications were down 5.5%, 4.1%, and 2.2% respectively.
Revenue by geography
The Americas accounted for 48.4% of TechM’s revenues, while Europe accounted for 25.4%. The rest of the world contributed 26.2%.
The Americas showed a de-growth of 5.9% sequentially, and 4.7% annually. Europe grew 6.3% sequentially and 5.1% annually, and the rest of the world grew 1.3% quarter on quarter, 4.8% year-on-year.