Tech Mahindra Limited- Q2 Results

Introduction

Tech Mahindra, the Indian multinational IT services and consulting company, began as a joint venture between British Telecom and Mahindra & Mahindra in 1986. It is a part of the Mahindra Group and currently has its headquarters in Pune, Maharashtra. Valued at over US $6 billion, the company boasts nearly 1.5 lakh employees across 90 countries. It was ranked number 5 in India’s IT firms and number 47 overall on Fortune India 500’s list for 2019.

On October 25th, the company announced its financial results for the second quarter of FY 2023-24. We have outlined its performance highlights and key financial metrics for the period under review.

Additional Read: Q2 Results Dashboard

Key Financial Metrics

Performance Highlights (Consolidated)

• The company’s revenue from operations declined 2% YoY to ₹12,863.9 Cr as against ₹13,129.5 Cr during Q2 FY 2022-23.
• Tech Mahindra reported a 61.1% YoY net profit (PAT) decrease at ₹505.3 Cr compared to ₹1,299.2 Cr during Q2 FY 2022-23.
• The Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) stood at ₹1,072 Cr during the period under review, down 46% YoY and 19.9% QoQ.
• The company’s Proft Before Tax (PBT) stood at ₹615.3 Cr during the second quarter as against ₹1,663.9 Cr during Q2 FY 2022-23.

As per an exchange filing by Tech Mahindra, the company faltered for the second successive quarter during Q2 FY 2023-24 in terms of revenue, registering a decline of 2% YoY and 2.2% QoQ. The results underperformed compared to the analysts’ estimates.

The company also posted its biggest dip in profit in more than 16 years, with mounting expenses and clients tightening spending in the midst of a tough macroeconomic environment. Tech Mahindra reported a decrease in its net profit of 61.6% YoY and 28.7% QoQ at ₹505.3 Cr. In terms of the US dollar, the company’s PAT stood at US $59 million, down 29.3% QoQ and 62.5% YoY.

At the operating level, the company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) stood at ₹1,072 Cr during Q2 FY 2023-24. In comparison, its EBITDA was reported at ₹1,984.1 Cr during Q2 FY 2022-23, showing a decline of 46% YoY.

The company’s total headcount increased by 2,307 QoQ and stood at 1,50,604 by the end of the second quarter of the fiscal year.

Management Commentary

While releasing its financial results for the second quarter of FY 2023-24, the company made the following announcements and remarks.

Major Announcements

• The company’s board approved an interim dividend of ₹12 per equity share (face value of ₹5 each).
• Tech Mahindra also approved the appointment of Ruchie Khanna as Company Secretary (Designate) from Dec. 1, 2023, and as Company Secretary, Compliance Offer and Key Managerial Personnel (from Sep. 1, 2024).

Also Read: Tech Mahindra Share Price

Tech Mahindra Limited: H1 Consolidated Financial Figures (YoY)

Particulars	H1 FY 2022-23	H1 FY 2023-24
Revenue from Operations	₹25,837.4 Cr	₹26,022.9 Cr
Total Income	₹26,249.7 Cr	₹26,478.8 Cr
Total Expenses	₹23,085.3 Cr	₹24,891.6 Cr
Profit Before Tax (PBT)	₹3,149.4 Cr	₹1,586.5 Cr
Profit After Tax (PAT)	₹2,446.7 Cr	₹1,208.9 Cr
Total Comprehensive Income	₹2,496.8 Cr	₹1,257.0 Cr

Tech Mahindra Limited: Consolidated Financial Figures (QoQ)

Particulars	Q1 FY 2023-24	Q2 FY 2023-24
Revenue from Operations	₹13,159.0 Cr	₹12,863.9 Cr
Total Income	₹13,350.7 Cr	₹13,128.1 Cr
Total Expenses	₹12,387.3 Cr	₹12,504.3 Cr
Profit Before Tax (PBT)	₹971.2 Cr	₹615.3 Cr
Profit After Tax (PAT)	₹703.6 Cr	₹505.3 Cr
Total Comprehensive Income	₹866.8 Cr	₹390.2 Cr

Tech Mahindra: H1 Standalone Financial Figures (YoY)

Particulars	H1 FY 2022-23	H1 FY 2023-24
Revenue from Operations	₹20,731.2 Cr	₹21,136.9 Cr
Total Income	₹21,411.3 Cr	₹21,851.5 Cr
Total Expenses	₹18,881.2 Cr	₹20,536.0 Cr
Profit Before Tax (PBT)	₹2,530.1 Cr	₹1,315.5 Cr
Profit After Tax (PAT)	₹1,896.3 Cr	₹1,115.3 Cr
Total Comprehensive Income After Tax	₹1,946.1 Cr	₹1,137.1 Cr

Also Read: Tech Mahindra Ltd. Overview

Tech Mahindra Limited: Standalone Financial Figures (QoQ)

Particulars	Q1 FY 2023-24	Q2 FY 2023-24
Revenue from Operations	₹10,697.2 Cr	₹10,439.7 Cr
Total Income	₹10,898.2 Cr	₹10,953.3 Cr
Total Expenses	₹10,169.6 Cr	₹10,366.4 Cr
Profit Before Tax (PBT)	₹728.6 Cr	₹586.9 Cr
Profit After Tax (PAT)	₹559.5 Cr	₹555.8 Cr
Total Comprehensive Income After Tax	₹657.3 Cr	₹479.8 Cr

Profit and Loss: Consolidated Figures

Particulars	Q2 FY 2023-24	Q1 FY 2023-24	Q2 FY 2022-23	QoQ	YoY
Revenue from Operations	₹12,863.9 Cr	₹13,159 Cr	₹13,129.5 Cr	-2.2%	-2%
Gross Profit	₹2,888.7 Cr	₹3,378.5 Cr	₹3,668.1 Cr	-14.5%	-21.2%
EBITDA	₹1,072.3 Cr	₹1,338 Cr	₹1,984.1 Cr	-19.9%	-46%
EBITDA%	8.3%	10.2%	15.1%	-1.9%	-6.8%
Profit Before Tax (PBT)	₹615.3 Cr	₹971.2 Cr	₹1,663.9 Cr	-36.6%	-63%
Profit After Tax (PAT)	₹505.3 Cr	₹703.6 Cr	₹1,299.2 Cr	-28.2%	-61.1%
Net PAT (After Minority Interest)	₹493.9 Cr	₹692.5 Cr	₹1,285.4 Cr	-28.7%	-61.6%

Tech Mahindra Limited: Consolidated Balance Sheet

Particulars	As of September 30, 2023
Total Non-Current Assets	₹20,796.6 Cr
Total Current Assets	₹22,694.1 Cr
Total Assets	₹43,490.7 Cr
Total Equity	₹26,857.5 Cr
Total Non-Current Liabilities	₹2,607.4 Cr
Total Current Liabilities	₹12,795.4 Cr
Total – Equity and Liabilities	₹43,490.7 Cr

Stock Performance

Tech Mahindra Limited declared the quarterly results for Q2 FY 2023-24 after market hours on October 25th. On the day, shares of the company fell 1.16% from ₹1,158 to ₹1,141.70 apiece on BSE.

Also Read: Mahindra Group

About the Company

Tech Mahindra Limited is a part of the Mahindra Group, which was founded in 1945 and is focused on leveraging next-gen technologies like 5G, Blockchain, and Metaverse. Tech Mahindra offers innovative and customer-centric digital experiences and is the only Indian entity in the world to receive the HRH The Prince of Wales’ Terra Carta Seal, recognising the company’s efforts and commitment to creating a sustainable future.

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Sources:

https://insights.techmahindra.com/investors/tml-q2-fy-24-fact-sheet.pdf

https://insights.techmahindra.com/investors/tml-q2-fy-24-press-release.pdf

https://insights.techmahindra.com/investors/tml-q2-fy-24-consolidated-results.pdf

https://insights.techmahindra.com/investors/tml-q2-fy-24-standalone-results.pdf