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India’s fifth largest IT services firm Tech Mahindra posted a 20.5 per cent rise in consolidated net profit at ₹750.1 crore for the first quarter ended June 30.
However, on a sequential basis, the profit-after-tax was down 12.6 per cent. In dollar terms, it fell 12.8 per cent to $111.5 million.
“Our margins were impacted on account of US visa costs and cyclical earnings in our telecom business,” said Vineet Nayyar, Vice-Chairman, Tech Mahindra. He said the impact of Brexit would be significant for the company though the currency risks are hedged 80 per cent.
“The biggest destablising factor right now is the UK’s exit from the EU. There will be fair amount of uncertainty in the near future. Decisions could lead to impacts on investment decisions,” Nayyar said.
Tech Mahindra has a significant exposure to Europe, with as much as 28.3 per cent revenues coming from the Continent. The UK contributes about 11 per cent of the revenues. Due to this, company’s EBITA margins shrank to 14.9 per cent from 16.7 per cent in the preceding quarter.
Overall, revenues were up 10 per cent at ₹6,921 crore compared to the same quarter last year. In dollar terms, revenues grew 4.3 per cent to $1.03 billion.
“We are seeing good results because of our focus on digital. Our digital business now contributes 20-22 per cent of the overall revenues. There will be some short-term disruptions, but we will be able to recover the margins by the end of the year,” said CP Gurnani, managing director and CEO, Tech Mahindra.
Digital business’ contribution to revenue stood at 14 per cent in the quarter ended March 31. Gurnani said the sudden jump was due to a large digital deal and was confident of maintaining the the trajectory.
Tech Mahindra said the contribution by the top five clients to revenues increased to 28.8 per cent from 27.9 per cent, top 10 clients' to 40 per cent from 39 per cent, and top 20 clients' to 52.6 per cent from 51.9 percent on QoQ basis.
Cash and cash equivalent for the company stood at ₹5,747 crore as of June 30, while the active client count stood at 818.
The company’s total headcount stood at 1,07,216 as of June 30, with an addition of 1,784 professionals during the quarter.
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