Tech Mahindra has posted a 24.84% fall in consolidated net profit at Rs 1,131.6 crore for the first quarter ended June 30, compared with Rs 1,505.7 crore posted during the sequential March quarter. However, bucking the industry trend, the IT services firm reported a fall in attrition during the quarter.
The company’s earnings also fell below Bloomberg analysts’ consensus estimate, who were expecting the firm to post a net profit of Rs 1,215.7 crore for the reporting quarter.
Compared with the year-ago quarter, Tech Mahindra’s net profit fell 16.4% from Rs 1,353.2 crore. During the quarter under review, the company’s revenues rose 4.88% to Rs 12,707.9 crore from Rs 12,116.3 crore in the March quarter, and 24.61% from Rs 10,197.6 crore recorded during the year-ago quarter, it said in a statement.
In Q1, Tech Mahindra’s cost of services rose to Rs 9,116.2 crore from Rs 8,560.3 crore in the March quarter and Rs 6,968.2 crore posted during the same quarter a year ago. During the quarter, the firm’s attrition fell to 22% on a last-12-month basis from 24% recorded in the fourth quarter of the previous financial year.
“The supply bases we have added in Tier-II cities such as Chandigarh, Nagpur and Coimbatore are now coming up to speed. I think the attrition rates in those cities will be lesser,” Tech Mahindra managing director and chief executive officer CP Gurnani said, adding the attrition rate is expected to fall further.
The firm hired 6,106 new personnel in Q4FY22 and 5,209 in the same quarter last year. Tech Mahindra also hired about 10,000 freshers in FY22 and intends to add a similar number in FY23.
“There are signs of worry regarding the economic headwinds, more related to inflation, more related to the energy crisis and more related to how different sectors will respond if there is a slowdown. We have analysed all the scenarios and we at Tech Mahindra will continue to deliver stronger performance,” he added. “Delivery transformation, cost optimisation and cash conversion will be key focus areas, as we continue to offset the strong supply side headwinds in the market. We aim to expand our profitability through operational excellence and improved operating metrics over the course of FY23,” said Rohit Anand, chief financial officer of Tech Mahindra.