Tech Mahindra Q4 net profit jumps 34.6 pc to Rs 1,081.4 crore

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Updated: April 26, 2021 6:47 PM

Milind Kulkarni, chief financial officer at Tech Mahindra, said the company has witnessed substantial margin improvement and cash flow generation during the year.

This acquisition will offer significant differentiation to the rapidly growing consulting business enabling us to drive cross-sell and downstream revenue.This acquisition will offer significant differentiation to the rapidly growing consulting business enabling us to drive cross-sell and downstream revenue.

IT major Tech Mahindra on Monday reported a 34.6 per cent jump in net profit to Rs 1,081 crore for the March 2020 quarter on account of an expansion in profit margins, and guided towards targeting for a double-digit revenue growth in FY22.

Its post-tax net profit grew 9.8 per cent to Rs 4,428 crore in 2020-21, on the back of a 2.7 per cent growth in overall revenues to Rs 37,855 crore.

Its Chief Executive and Managing Director C P Gurnani said 2020-21 was the “repair” year when the company faced the pandemic impact, and promised 2021-22 to be a “growth year”.

The Mahindra Group achieved a total contract value (TCV) of over USD 1 billion in the March 2020 quarter, double the usual run rate of about USD 450 million, Gurnani said. He added that the reporting quarter performance gives revenue clarity for 2021-22 and also a momentum to build on in the first quarter.

He said the pipeline of deals which the company is looking at is the strongest ever in the history of the company. It has also identified opportunities coming out of 5G rollout, human-centred experience, cloud and platforms as the key focus areas for the company going ahead.

As the new deals go ahead, the hiring will also increase by 8-10 per cent in the next few quarters, Gurnani said adding that the company will be a net hirer in the first two quarters of the new fiscal.

Over the past few quarters, its overall headcount has been going down which a key executive explained as being part of the repair strategy, and the hiring will start as new projects get embarked on.

For the reporting quarter, its overall headcount dropped by 847 people to 1.21 lakh employees.

Its Chief Financial Officer Milind Kulkarni said the company is rolling out pay hikes for the employees from April 2021 onwards and letters are being dispatched at present.

For the reporting quarter, its revenue grew 2.5 per cent to Rs 9,730 crore while the operating profit margins widened to 20 per cent. For the year as a whole, its 2020-21 margins expanded 2.60 per cent to 18.1 per cent.

The company is aiming to grow the topline (revenue) in double-digits in 2021-22 on an organic basis, its CEO said.

Gurnani said there will not be a large impact on project deliveries because of the ongoing second wave of infections in the country as work will continue from homes. But, he conceded that some new projects may get delayed because of a dependence on travel in early part of the work.

He said employee safety is the prime focus for the company during this time, and added that it has tied up with a hospital to convert a part of its campus in Noida into a 50-bed COVID care facility.

The company plans similar initiatives in other places where it has campuses as well, its President Vivek Agarwal said adding that such facilities can be helpful for employees, their families and the wider society.

The company announced its second acquisition for the month in Eventus Solutions Group of the US for an undisclosed amount in an all-cash deal.

The acquisition will enable the company to build its consulting practice and move up the value chain in the BPS (business process services) business, he said adding that it will start helping the revenues from this quarter onwards.

The company’s board recommended a dividend of Rs 30 per share, equally split between regular and special dividend, taking the overall payout to Rs 45 per share in 2020-21, if one were to add Rs 15 of interim dividend declared earlier.

Analysts at the private brokerage Reliance Securities said the results present a “mixed bag”, but the sharp rise in deal wins is a dominant story of the earnings.

The company’s shares gained 1.34 per cent to close at Rs 963.15 apiece on the BSE on Monday, as against gains of 1.06 per cent on the 30-share benchmark.

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