Tech Mahindra posts 9% increase in Sept quarter profit

Mumbai: Country's fifth largest software firm Tech Mahindra Tuesday reported 9.2 percent increase in its September quarter profit at Rs 786 crore, helped by volume growth and margin expansion.

The Mahindra Group company's revenues grew 20.5 percent over the last year's and 5.1 percent sequentially to Rs 6,616 crore, helped by a growth across verticals and majority of the geographies it operates in, its managing director and chief executive C P Gurnani told reporters here.

He, however, said he is "cautiously optimistic" on the way forward, pointing to half of its business coming from companies outside of the US and currency volatilities as key risks.

Gurnani said segments like telecom as well as the European region which constitutes a bulk of its business, which were witnessing headwinds in the recent past, were able to post revenue growths.

Expressing satisfaction at the numbers, vice chairman Vineet Nayyar said the company could report a good quarter after two consecutive quarters of tepid performance due to work on upping utilisation by four percentage points to 79 percent now.

He, however, said the work is far from over and it will continue to press other levers to maximise its profits. Gurnani elaborated that those include increasing revenues, better yield management and focus on automation.

During the reporting quarter, its pre-tax profit margins grew by 1.6 percent over preceding quarter to 16.6 percent, which included gains of 0.60 percent on forex movements, 1.50 percent through aspects like better utilisation, 0.80 percent on saving on account of non-payment for H-1B Visa fees, while SGNA losses trimmed margins by 1 percentage point, chief financial officer Milind Kulkarni said.

Gurnani said the deal pipeline is looking good and the company added 18 clients to take the total active customer base to 788 at the end of the quarter.

It hired 1,562 employees during the quarter to take the total base to 1.05 lakh and the cash and equivalents stood at Rs 3,492 crore as of September 30.

Gurnani said there's sizable headroom to grow in segments within the enterprise business, including in manufacturing, pharma and financial services.

He said the digital revenues constitute 12 percent of the revenue at present and company will continue to invest on this front.

The company will work on maximising yields from the portfolio of acquired companies to grow the bottomline in the future, he said.

Share price of the company ended 0.28 percent up at Rs 557.10 on the BSE, which closed at 26,590.59, up 0.12 percent.