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Tech Mahindra Q2 beats estimates with profit at Rs 1,065 crore; declares special dividend

The IT services company has declared a special dividend of Rs 15 per equity share for the quarter

Tech Mahindra on October 23 reported a profit of Rs 1,064.6 crore in the quarter-ended September 2020, registering a 9.5 percent growth compared to June quarter.

The profitability was supported by strong operating growth, but the 71.8 percent sequential fall in other income to Rs 117.5 crore restricted growth.

Revenue from operations during the quarter increased 2.9 percent to Rs 9,371.8 crore from Rs 9,106.3 crore in the previous quarter.

The dollar revenue at $1,265.4 million grew by 4.8 percent QoQ, while revenue growth was at 2.9 percent QoQ in constant currency terms, Tech Mahindra said in its BSE filing.

The IT services company has declared a special dividend of Rs 15 per equity share for the quarter.

"The Repair, Rally and Rise strategy has helped the company to emerge stronger, as we journey towards a post COVID-19 world. We are witnessing demand revival across multiple segments, as customers have accelerated their pace of digital transformation," CP Gurnani, Managing Director & Chief Executive Officer said.

"The focus on creating human centered experiences will enable us to capture increased spends on consumerization, as businesses try to stay relevant in the current environment," he added.

Communications business registered a 3.2 percent dollar revenue growth and 0.8 percent in constant currency terms, while enterprise segment reported 5.9 percent dollar revenue growth and 4.3 percent growth in constant currency terms.

Revenue from Americas grew by 2.7 percent sequentially in Q2FY21, Europe 2.1 percent and Rest of World 11.7 percent, company said.

Tech Mahindra has won order of $421 million in September quarter against $290 million in June quarter. It added 2 clients in $20 million band, 1 client in $10 million band, 4 clients in $5 million category and 9 clients in $1 million band during the quarter.

 


Total headcount of the company increased by 842 employees sequentially to 1,24,258 employees in Q2FY21, while active clients at 988 in Q2FY21 rose by 7 clients QoQ.

At the operating level, earnings before interest and tax (EBIT) surged 45.1 percent QoQ to Rs 1,331.3 crore and margin expanded by 10.1 percent to 14.2 percent in quarter ended September 2020, as SGA expenses fell 3.9 percent and cost of services declined 1.3 percent QoQ.

Company has cash and cash equivalent at $1,564 million as of September 2020, company said.

On October 22, Tech Mahindra said its subsidiary Tech Mahindra (Americas) Inc has agreed to acquire 6.03 percent equity shares in Texas-headquartered VitalTech Holdings Inc, which is in the business of cloud-based telehealth and remote patient monitoring platform development and services.

Last week, the company signed joint venture agreement with Sumitomo Corporation, Japan to provide engineering services to the automotive sector, with equal shareholding.

The stock has given massive returns to investors during current financial year as well as in September quarter, rising 50 percent and 45 percent respectively, especially after easing supply constraints and less impact of lockdown on overall business of IT companies.

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