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Tech Mahindra: A Good Performance - Views on News from Equitymaster
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Tech Mahindra: A Good Performance
Mar 28, 2017

Tech Mahindra has announced its third quarter results for FY17. The company reported a 5.4% QoQ growth in consolidated sales and a 38.3% QoQ growth in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated sales grew by 5.4% QoQ in rupee terms. In US$ terms, revenue growth was 4.1% QoQ. In constant currency terms, revenue growth was 5.4% QoQ.
  • Operating expenses increased by 4.5% QoQ. The operating profit grew by 10.9% QoQ. The operating margin improved sequentially to 15.7%.
  • An 11.9% QoQ jump in other income and a sequential decline in the tax rate, also contributed to the bottomline performance. The net profit increased by 38.3% QoQ.

    Consolidated Financial Snapshot
    (Rs m) 2QFY17 3QFY17 Change 9MFY16 9MFY17 Change
    Sales 71,674 75,575 5.4% 196,105 216,458 10.4%
    Expenditure 60,973 63,710 4.5% 164,908 183,601 11.3%
    Operating profit (EBITDA) 10,701 11,865 10.9% 31,197 32,858 5.3%
    Operating profit margin (%) 14.9% 15.7% 15.9% 15.2%
    Other income 1,387 1,552 11.9% 2,841 5,397 90.0%
    Finance cost 345 349 1.0% 636 968 52.3%
    Depreciation 2,448 2,480 1.3% 5,416 6,946 28.2%
    Exceptional items 0 0 0 0
    Profit before tax 9,296 10,588 13.9% 27,986 30,340 8.4%
    Tax 2,860 2,141 -25.1% 6,377 7,469 17.1%
    Minority interest -72 -223 132 174 31.8%
    Profit from assosiates -2 2 14 -23
    Profit after tax/(loss) 6,506 8,671 33.3% 21,491 22,674 5.5%
    Other comprehensive income -123 158 1,335 663 -50.4%
    Net profit 6,383 8,830 38.3% 22,826 23,337 2.2%
    Net profit margin (%) 8.9% 11.7% 11.6% 10.8%
    No of shares (m) 973.1
    Diluted earnings per share 33.9
    P/E ratio # 13.5
    # On a trailing 12-months earnings

    Revenue breakup
    (Rs m) 2QFY17 3QFY17 Change
    On the basis of industry
    Communications 34,690 35,747 3.0%
    Manufacturing 13,761 13,906 1.0%
    Tech, Media and Entertainment 5,017 4,837 -3.6%
    BFSI 8,386 9,900 18.1%
    Retail, Transport and Logistics 4,874 5,744 17.8%
    Others 4,946 5,441 10.0%
    On the basis of geography
    Americas 34,619 35,294 1.9%
    Europe 21,287 22,219 4.4%
    Rest of the world 15,768 18,062 14.5%
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