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Tech Mahindra (TechM) reported a fall of 5.3 per cent in net profit for the third quarter (Q3) of 2022-23 (FY23) at Rs 1,297 crore. Sequentially, profit after tax was down 0.9 per cent. Inflation and supply-side constraints pulled the company’s profit down.
TechM’s Q3 performance met with Bloomberg estimates on revenue, but was a miss on net income. Bloomberg estimates expected revenue at Rs 13,522.6 crore and net income at Rs 1,299.6 crore.
Revenue for the quarter came in at Rs 13,734.6 crore for Q3 — up 19.9 per cent. On a sequential basis, revenue was up 4.6 per cent.
What came as a positive this year was the total contract value of deals signed at $795 million. This was up 11 per cent, compared with the $716 million signed in the second quarter of FY23.
The other milestone that the company crossed this quarter was its enterprise business, which touched the $1-billion quarterly revenue mark.
“In a seasonally weak quarter, we have managed to deliver. We are witnessing moderation in growth, given the tough macroeconomic environment. We will continue to work with our customers to pre-empt their technological requirements and identify new demand drivers, especially for digital services,” said C P Gurnani, managing director and chief executive officer, TechM.
Overall, the Q3 performance of the company reflected the pressures of the macro environment. For instance, the US geography was down 0.4 per cent sequentially. The company attributed this to pressure in certain verticals, such as banking, financial services and insurance and manufacturing. Europe, however, grew 1.6 per cent quarter-on-quarter (QoQ).
“I would not like to take this as a trend, but certain sectors are feeling the impact of the current macro uncertainties a lot more. For instance, discretionary spending in a few business-to-consumer companies has hit the pause button, although no deals or contracts have been cancelled,” said Gurnani.
Headcount for the quarter was down 4.2 per cent QoQ. The company said this was largely due to employee attrition in the BPO segment. Attrition for the quarter was down to 17 per cent, from 20 per cent in the preceding quarter.
“Falling attrition is good. We want to be an agile organisation. Budgeting, hiring, and management of operational metrics should be done on a monthly, rather than a quarterly, basis,” he added.
He said the management team will be meeting every month and will be focused on client needs and market trends.
Rahit Anand, chief financial officer, TechM, said, “Our numbers reflect resilience as we continue to work on the expansion of operating margin. I am confident that our strategy of client centricity and agility, combined with delivery-led transformation, will help us create value for our customers and stakeholders alike.”
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