Net profit of IT services company Tech Mahindra fell 40.9% year-on-year to ₹661 crore for the quarter ended March, dragged down by tepid demand in key verticals like telecom.
Revenue of the IT firm declined 6.2% to ₹12,871 crore during the fourth quarter.
“The volatility in spends is still very high given our exposure to telecom where visibility is still limited. Some element of our business that we have in part of the Middle East and Africa is still stressed,” Tech Mahindra CEO and managing director says during the company’s Q4 earnings call.
The software services firm lags behind its bigger peers in the IT industry.
“Q4 marks the low point in our year-on-year growth trajectory. We are confident that from Q1 onwards you will start to see an improvement on our year-on-year performance,” says Joshi. There, however, will be volatility between quarters, he adds.
The company’s EBIT margin or operating margin stood at 7.4% in Q4, compared with 5.4% in the December quarter.
For the full financial year, Tech Mahindra’s consolidated profit fell 51.2% to ₹2,358 crore while revenue slipped 2.4% ₹51,996 crore.
The IT firm’s total headcount dropped to 145,455 in Q4.
"As we step into FY'25, we look forward to improvement in clients spending, which fuels our optimism for a better revenue performance ahead. Our unique ability to enable customers with transformative scale at unparalleled speed, differentiates us from competitors. FY'24 posed its fair share of challenges for the IT services sector; yet, amidst the global economic uncertainties, we continue to observe a notable push towards digital adoption," says Mohit Joshi, CEO & MD, Tech Mahindra.
"With another quarter of robust cash generation, we have reported improvement in deal wins and operating margins in Q4FY'24, which has enabled consistent dividend distribution. We are confident that our actions will lead to steady earnings growth in the coming years. We will continue to focus on operational excellence and cost savings to deliver superior shareholder returns," says Rohit Anand, chief financial officer, Tech Mahindra.
In an interview to Fortune India last year, Mahindra Group CEO Anish Shah said that Tech Mahindra needs to continue its expansion beyond telecom. “We need to look at a very strong deliver structure because we have got a margin gap versus our peers and that margin gap we have to find a way to close,” he said.
