Tech Mahindra reported a robust performance for the first quarter of fiscal year 2025, with a 23% year-on-year increase in net profit, reaching Rs 851.5 crore. This significant jump in profit is attributed to an exceptionally low base quarter and effective cost management strategies. Sequentially, net profit rose by 29%. Consolidated revenue for the April-June quarter stood at Rs 13,005.5 crore, reflecting a 10% increase from the preceding quarter.
Tech Mahindra Q1 Results: Overview
Tech Mahindra’s Q1 FY25 earnings met street expectations, aligning closely with the projections from a Moneycontrol poll of 10 brokerages. The poll anticipated a net profit of Rs 861 crore and revenue of Rs 12,968 crore for the quarter. The IT services giant’s strong performance was primarily driven by strategic portfolio shifts, volume growth, and stringent cost management.
Revenue and Profit Growth
The company’s EBIT margin, or operating margin, improved to 8.5%, up by 110 basis points from the previous quarter’s 7.4%. This margin exceeded Moneycontrol’s estimate of 8%. The total contract value (TCV) of deals for Q1 reached $534 million, an increase from $500 million in the previous quarter.
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Executive Commentary
Mohit Joshi, Chief Executive Officer and Managing Director of Tech Mahindra, expressed optimism about the positive momentum in various industry verticals, which contributed to revenue growth and margin expansion during a typically weak quarter. Joshi stated, “We continue to focus on execution and are on track to achieve our stated goals for FY27.”
Rohit Anand, Chief Financial Officer of Tech Mahindra, highlighted the promising start to the current turnaround year and the company’s medium-term strategy. “Our focus continues to be on investing in the business for long-term sustainable performance,” Anand added.
Headcount and Attrition
The company’s headcount increased by 2,165 employees sequentially, bringing the total to 147,620. However, on a year-on-year basis, the headcount was down by 677. Attrition remained steady at 10% sequentially.
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Revenue and Profit Surge in Q1 FY25
The substantial rise in net profit and revenue for Q1 FY25 highlights Tech Mahindra’s successful strategies in navigating a challenging economic environment. The company’s ability to leverage portfolio shifts and manage costs effectively played a crucial role in this growth.
EBIT Margin Improvement
The improvement in EBIT margin to 8.5% indicates Tech Mahindra’s efficiency in operations and cost management. This surpasses the anticipated margin and showcases the company’s operational strength.
Deal Value and Industry Momentum
The increase in total contract value (TCV) to $534 million underscores Tech Mahindra’s strong market position and ability to secure significant deals. The positive momentum in most industry verticals contributed to this growth.
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Strategic Focus for FY27
Tech Mahindra’s leadership remains committed to achieving its long-term goals, with a clear focus on execution and sustainable performance. The strategic investments and focus areas outlined by the company aim to ensure continued growth and success.
Workforce Dynamics
The increase in headcount by 2,165 employees indicates Tech Mahindra’s growth trajectory and investment in talent. Despite a year-on-year decrease, the company’s stable attrition rate of 10% reflects a balanced workforce management approach.