IT service provider Tech Mahindra on Friday reported a 39 percent jump in its consolidated net profit for the March 2022 quarter at Rs 1,678.4 crore, radiating confidence that positive business momentum will continue into the current fiscal year.
On a stand-alone basis, the Mahindra group company reported an after-tax profit of Rs 1,505 crore in the quarter under review, compared to Rs 1,081 crore a year ago.
The fifth largest IT services company ended FY22 with a standalone profit of Rs 5,566 crore against Rs 4,428 crore in FY21.
Turnover from operating activities grew to Rs 12,116 crore during the reporting quarter, from Rs 9,729 crore in the same period a year ago, while forex surges helped a gain on the company’s other revenues, which stood at Rs 320 crore versus Rs 32.6 crore.
The company closed the quarter with a total contract value of $1 billion and fiscal year with $3 billion in new deals. Wins during the quarter included a 5G operator in Europe and others in areas such as retail and healthcare, company officials said.
General manager and chief executive CP Gurnani said he is “very confident” in continuing business momentum in FY23. Business Strategy President Vivek Agarwal said the company expects its mainstay of communications, media and entertainment, as well as its upcoming metaverse offering, to gain momentum in the new fiscal.
Agarwal added that the demand environment is robust and that geopolitical tensions triggered by the Russian invasion of Ukraine or other developments such as runaway inflation in the US have had no impact.
Designated Chief Financial Officer Rohit Anand said the company hired 10,000 freshmen in FY22 and will continue to recruit with a mix of newer and later staff. The total workforce was 1.51 lakh.
Keeping supply-side issues in mind, the company gave more than one rating to employees and the average salary increase was 10 percent, Gurnani said.
Milind Kulkarni, Chief Financial Officer of Tech Mahindra, said the operating profit margin was 17.2 percent, up from 20 percent in the same period last year and 18 percent in the same period last year. This was heavily impacted by lower occupancy rates and also supply-side issues such as additional pay increases and retention money to be paid to staff, he said.
The profit line was benefited by a cut in the tax rate to more than 17 percent, from 27 percent, Kulkarni said. The tax charge was Rs 136 crore in the reporting quarter as against 511 crore in the same period a year ago.
The company has committed $900 million for acquisitions in FY22 and will focus on integrating the companies acquired in the past 18 months in FY23, Agarwal said.
On Friday, Tech Mahindra scrip closed 0.93 percent lower at Rs 1,202.30 apiece on the BSE, compared with a 0.26 percent correction in the benchmark index.