Tech Mahindra Q3 Report: Tech Mahindra, a prominent IT services provider, witnessed a significant 60.6% YoY decrease in net profit to Rs 510 crore for the third quarter ending December 31. This decline was attributed to a continued slowdown in demand across key verticals such as hi-tech, telecom, and financial services. The YoY net profit fell well below Moneycontrol’s estimated 41% decline at Rs 763 crore. However, on a sequential basis, net profit showed a modest increase of 3%.
Consolidated Revenue and EBIT Margin Performance
Consolidated revenue for Q3FY24 experienced a 5% YoY decline, reaching Rs 13,101 crore, closely aligning with Moneycontrol’s estimate of Rs 12,957 crore. On a quarter-over-quarter (QoQ) basis, revenue demonstrated a 1.8% growth. The company’s EBIT margin, or operating margin, stood at 5.4%, showing an improvement/worsening compared to the previous quarter’s 4.7%. This EBIT margin figure deviated significantly from Moneycontrol’s estimated 7%.
CEO’s Perspective on the Quarter
Mohit Joshi, CEO and Managing Director of Tech Mahindra, described the quarter as a mixed outcome. While there was growth in the manufacturing and healthcare segments, spending remained muted in areas like communications, BFSI, and hi-tech. Joshi emphasized the ongoing internal focus on realignment under the new structure to strengthen the organization’s foundations.
CFO’s Outlook and Cash Conversion
Rohit Anand, the company’s Chief Financial Officer, expressed encouragement regarding robust cash conversions in the year. The company aims to maintain this rigor in other operational areas. The deal Total Contract Value (TCV) saw a decline from $640 million to $380 million compared to the previous quarter.
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Strategic Restructuring under New Leadership
This quarter marks the first since CEO Mohit Joshi assumed full control from former CEO CP Gurnani. In an effort to turn the business around, Joshi implemented a restructuring of the organization and leadership team effective January 1. The company is currently focused on diversifying into other segments, particularly BFSI and healthcare, with nearly 40% of revenue currently coming from the Communications, Media, and Entertainment (CME) business.
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