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Tech Mahindra: A Muted End to the Year - Views on News from Equitymaster
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Tech Mahindra: A Muted End to the Year
Jul 4, 2016

Tech Mahindra has announced its fourth quarter and full year results for FY16. The company reported a 2.7% QoQ growth in consolidated sales and an 18.2% QoQ growth in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated net sales grew by 2.7% QoQ. In US$ terms, revenue growth was 0.8% QoQ. In constant currency terms, revenue was up 1.3% QoQ.
  • Operating expenses increased by 2.8% QoQ. The operating profit was higher by 2.2% QoQ. The operating margin was flat sequentially at 16.9%.
  • A big jump in other income and a steep fall in the tax rate (both sequentially) were responsible for the rise in net profit by 18.2% QoQ.

    Consolidated financial snapshot
    (Rs m) 3QFY16 4QFY16 Change FY15 FY16 Change
    Sales 67,011 68,837 2.7% 226,213 264,942 17.1%
    Expenditure 55,654 57,224 2.8% 184,292 221,758 20.3%
    Operating profit (EBITDA) 11,358 11,613 2.2% 41,921 43,184 3.0%
    Operating profit margin (%) 16.9% 16.9% 18.5% 16.3%
    Other income 639 1,659 159.5% 1,065 5,566 422.7%
    Finance cost 244 330 35.4% 691 961 39.1%
    Depreciation 1,736 2,177 25.4% 6,114 7,620 24.6%
    Exceptional items 0 0 0 0
    Profit before tax 10,017 10,765 7.5% 36,181 40,169 11.0%
    Tax 2,327 1,571 -32.5% 9,596 8,602 -10.4%
    Minority interest 97 235 142.6% 310 413 33.2%
    Profit from assosiates -1 12 1 26
    Profit after tax/(loss) 7,592 8,971 18.2% 26,277 31,180 18.7%
    Net profit margin (%) 11.3% 13.0% 11.6% 11.8%
    No of shares (m) 967.8
    Diluted earnings per share 32.2
    P/E ratio# 15.9

    # On a trailing 12-months earnings basis

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