Tech Mahindra Reports Q1 Net Profit of Rs 851 Crore, Meets Analyst Expectations

On July 25, Tech Mahindra announced its financial results for Q1 FY25, revealing a significant increase in net profit. The company reported a net profit of Rs 851.5 crore, marking a 29 percent quarter-on-quarter growth.

This rise was attributed to a low base effect from the previous quarter. Consolidated revenue for the April-June period also saw an increase, climbing 10 percent from the preceding quarter to reach Rs 13,005.5 crore.

Q1 Performance Meets Street Expectations

Tech Mahindra's fiscal first-quarter results were largely in line with market expectations. According to a Source poll of 10 brokerages, the forecasted net profit for Q1 was Rs 861 crore, driven largely by the previous quarter’s exceptionally low base.

Revenue projections for the quarter were around Rs 12,968 crore, slightly below the actual reported figure. The results were seen as a positive start for the company, particularly considering the seasonal nature of the quarter.

Key Drivers of Earnings and Margin Expansion

The company’s earnings growth in Q1 was attributed to several key factors including portfolio shifts, volume growth, and effective cost management.

Tech Mahindra’s EBIT (Earnings Before Interest and Taxes) margin improved to 8.5 percent, up 110 basis points from the previous quarter’s 7.4 percent. This was above the Source estimate of 8 percent, highlighting better-than-expected operational efficiency.

Increase in Deal TCV and Strategic Focus

Tech Mahindra’s deal total contract value (TCV) for the quarter stood at $534 million, an increase from $500 million in the prior quarter. This indicates a robust pipeline and a positive outlook for future revenue streams.

CEO Mohit Joshi commented on the encouraging performance across various industry verticals, noting that revenue growth and margin expansion occurred despite the traditionally weaker quarter. He emphasized that the company remains focused on execution and is on track to meet its FY27 goals.

Leadership Insights on Q1 Results and Strategy

Rohit Anand, the Chief Financial Officer of Tech Mahindra, highlighted that the Q1 results mark a strong beginning for both the current turnaround year and the company’s medium-term strategy. Anand reiterated the company’s commitment to investing in long-term sustainable performance, aligning with their strategic priorities.

Workforce and Attrition Metrics

In terms of workforce dynamics, Tech Mahindra’s headcount increased by 2,165 sequentially, reaching a total of 147,620. However, the number was down by 677 year-on-year. Attrition rates remained stable sequentially at 10 percent, indicating steady employee retention amid growth.

Overall, Tech Mahindra’s Q1 FY25 performance reflects a strong start to the fiscal year, driven by improved margins, growing revenues, and strategic investments in business development.