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Tech Mahindra: A Dull Start to the Year - Views on News from Equitymaster
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Tech Mahindra: A Dull Start to the Year
Oct 6, 2016

Tech Mahindra has announced its first quarter results for FY17. The company reported a 0.5% QoQ growth in consolidated sales and an 15.8% QoQ fall in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated net sales grew by 0.5% QoQ. In US$ terms, revenue growth was 0.9% QoQ.
  • Operating expenses increased by 2.8% QoQ. The operating profit fell by 10.6% QoQ. The operating margin fell sequentially to 14.9% in 1QFY17.
  • A big jump in other income and a fall in finance costs (both sequentially) did not offset the weak operating performance. The net profit fell by 15.8% QoQ.

    Consolidated financial snapshot
    (Rs m) 4QFY16 1QFY17 Change
    Sales 68,837 69,209 0.5%
    Expenditure 57,327 58,918 2.8%
    Operating profit (EBITDA) 11,510 10,292 -10.6%
    Operating profit margin (%) 16.7% 14.9%
    Other income 1,603 2,458 53.3%
    Finance cost 340 274 -19.3%
    Depreciation 2,174 2,019 -7.1%
    Exceptional items 0 0
    Profit before tax 10,600 10,457 -1.3%
    Tax 1,807 2,468 36.6%
    Minority interest 226 469 107.3%
    Profit from assosiates 13 -23
    Profit after tax/(loss) 8,580 7,496 -12.6%
    Other comprehensive income 1,073 628 -41.4%
    Net profit 9,652 8,124 -15.8%
    Net profit margin (%) 14.0% 11.7%
    No of shares (m) 971.2
    Diluted earnings per share 37.0
    P/E ratio# 11.5

    # On a trailing 12-months earnings basis

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