Tech Mahindra has reported impressive financial results for the second quarter of the fiscal year 2024, which ended on September 30, 2024. On October 19, 2024, the company announced that its net profit surged by 153.1% year-on-year, reaching ₹1,250 crore. This remarkable growth comes amid ongoing restructuring efforts under the leadership of CEO Mohit Joshi. The company also declared an interim dividend of ₹15 per share.
Main Points
Financial Highlights
Tech Mahindra’s consolidated revenue for Q2 stood at ₹13,313 crore, marking a 3.5% increase year-on-year and a 2.4% increase quarter-on-quarter. This revenue growth exceeded market expectations, as analysts had predicted a more modest rise to around ₹13,171 crore. The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter was reported at ₹1,750 crore, reflecting an 11.9% increase from the previous quarter and a significant 63.2% increase year-on-year.
The EBIT margin improved to 9.6%, up from 8.5% in the last quarter, indicating effective cost management and operational efficiency. The company’s profit after tax (PAT) margin also saw a notable rise to 9.4%, showcasing its strong financial health.
Key Performance Metrics
| Metric | Q2 FY25 | Q1 FY25 | Q2 FY24 |
|---|---|---|---|
| Revenue | ₹13,313 crore | ₹13,055 crore | ₹12,844 crore |
| Net Profit | ₹1,250 crore | ₹853 crore | ₹493 crore |
| EBITDA | ₹1,750 crore | ₹1,565 crore | ₹1,070 crore |
| EBIT Margin | 9.6% | 8.5% | 5.9% |
Strategic Initiatives
Under Project Fortius, Tech Mahindra has focused on enhancing client relationships and expanding its partner ecosystem. Mohit Joshi noted that despite challenges in certain sectors like communications and manufacturing, other verticals such as BFSI (Banking, Financial Services, and Insurance) have shown promising growth.The company secured new deal wins totaling $603 million, up from $534 million in the previous quarter. This reflects a robust pipeline of projects and a commitment to strengthening its market position.
Employee Growth
Tech Mahindra’s workforce has also seen significant growth. The total headcount increased to 154,273, with an addition of 6,653 employees in the last quarter alone. This includes hiring 2,000 freshers during this period as part of its ongoing recruitment efforts.However, attrition rates have risen slightly to 10.6%, up from 10% in the previous quarter. The company aims to maintain high utilization rates while managing talent effectively.
Dividend Declaration
The board of Tech Mahindra has declared an interim dividend of ₹15 per share, with November 1 set as the record date for determining eligible shareholders. This move is part of the company’s capital allocation strategy aimed at rewarding shareholders while maintaining strong cash flow.
Market Reaction
Following the announcement of these results, Tech Mahindra’s shares closed down by 0.68% at ₹1,688 on the Bombay Stock Exchange (BSE). Despite this minor dip, the overall sentiment remains positive due to the company’s strong performance metrics and strategic initiatives.
Future Outlook
Looking ahead, Tech Mahindra plans to continue its focus on operational excellence and strategic partnerships to drive growth in various sectors. The management remains optimistic about navigating challenges in specific verticals while capitalizing on opportunities in others.
