Tech Mahindra Q4 net profit slips by 8.4% due to currency appreciation

IT major Tech Mahindra posted an 8.4 per cent decline in consolidated net profit to Rs 1,126.6 crore for the quarter ended March 31, 2019, due to currency appreciation and prudent provisioning for some of the customers.

Its net profit stood at Rs 1,230.8 crore in the corresponding period a year ago.

However, the city-based company saw its consolidated revenue from operations increasing by 10.4 per cent to Rs 8,892.3 crore as against Rs 8,054.5 crore in the year-ago quarter, the company said.

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For the full fiscal, the net profit was up 13.2 per cent to Rs 4,288.8 crore, while revenue from operations was higher by 12.9 per cent to Rs 34,742.1 crore as compared to FY2017-18.

"We are overall pleased with the performance. Last time we had mentioned that focus would be on operating efficiencies, digital revenue, making sure that the communications engine starts firing. I think we have done very well on all the three counts.

"Our EBITDA margin has shown a significant improvement. Our digital revenue is all time high and communication group has now delivered extremely good performance," Tech Mahindra Managing Director and Chief Executive Officer C P Gurnani told reporters here.

"We will be pressing the pedal on more operating efficiency gains, growth in both the sectors -- enterprise and communication. In dollar terms he noted the revenue for the year was close to USD 5 billion, at USD 4.97 billion, a growth of 5.8 per cent in constant currency terms," he said.

The manufacturing vertical has crossed a billion dollar in revenue, grown 10 per cent annually, the second vertical for the company which has crossed revenues in excess of a billion dollar after communications.

The communications business grew 4.5 per cent quarter on quarter and there is a good momentum in the business, Gurnani noted, compensating for the enterprise business that has shown a de-growth of 2.2 per cent quarter on quarter.

"There has been a slowdown mainly because of the projects being deferred and some of the projects that have got closed. The business which have done well are some of the government initiatives, defence initiatives, digital initiatives and initiatives in 5G enterprise, block chain, cyber security and engineering services," Gurnani said.

"I was targeting 8-10 per cent (growth) and I think we should have done a little better. The timing didn't work out, one quarter here or there slipped off. I am not disheartened at all...but we will be trying much harder to look at growth vector and execution efficiency vector," he added.

The free cash flow for FY2018-19 was at Rs 3,708 crore.

The total headcount of the company stood at 1,21,082 people at the end of March 2019 quarter, an addition of 8,275 persons annually.

The attrition reduced by 2 percentage points in the last quarter at 19 per cent.

Its active clients count stood at 938 in the said quarter.

The Board of Directors have recommended a dividend of Rs 14 per share for the financial year ended March, 2019, subject to approval by shareholders at the forthcoming annual general meeting on July 31.