Tech Mahindra net falls 60% to Rs 510 cr in Q3

This is the first quarter since new CEO Mohit Joshi completely took over reins of the company from former CEO CP Gurnani

Bengaluru: IT services major Tech Mahindra on Wednesday posted a mixed set of results for the third quarter of ongoing financial year owing to subdued demand environment.

For the third quarter ended December, Tech Mahindra reported a 60.6 percent fall in net profit to Rs 510 crore on year-on-year basis. Consolidated revenue during this period declined 5 percent YoY at Rs 13,101 crore. In dollar term, revenue stood at $1.57 billion, a rise of 1.1 per cent in constant currency term on sequential basis.

Net new deals of the company saw a decline to $381 million in the third quarter as compared to $640 million reported in the second quarter.

"The quarter was a mixed outcome, with growth in the manufacturing and healthcare segments but muted spending in areas like communications, BFSI, and hi-tech. While this dichotomy in the markets will take its own time to settle, we are focusing internally on realigning under the new structure and strengthening the foundations of our organisation," Tech Mahindra's Chief Executive Officer and Managing Director, Mohit Joshi said.

This is the first quarter since new CEO Mohit Joshi completely took over reins of the company from former CEO CP Gurnani, who retired after the end of his term. Joshi has restructured the organisation and the leadership team, which came into effect on January 1, in his bid to improve the performance of the company.

Among verticals, the largest vertical- Communications, Media & Entertainment (CME) saw a decline in its growth by 0.3 per cent in sequential term. CME contributed 36.5 per cent to overall revenue of the company during the December quarter. Retail, transport & logistics vertical grew 6.4 per cent, while manufacturing witnessed a growth of 2.9 per cent during the quarter.

Among geographies, Americas saw a growth declining by 1.5 per cent, while Europe saw a growth of 2 per cent during this period.

During the third quarter, operating margin stood at 8.8 per cent, which was a rise of 40 basis points over the previous quarter.

"This year has given us the opportunity to step back and review our portfolio. We are confident thatthese actions will help us correct our course and deliver value in the long term. We are encouraged bythe robust cash conversions this year, and we hope to continue this rigor in other operational areas aswell,” Rohit Anand, Chief Financial Officer at Tech Mahindra said.

During the quarter, total headcount fell by 4,354 to 146,250, while its attrition fell to 10 per cent from 11 per cent reported in the previous quarter.