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Tech Mahindra: Rapid Recovery Underway - Views on News from Equitymaster

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Tech Mahindra: Rapid Recovery Underway

Nov 2, 2017

Tech Mahindra has announced its second quarter results for FY18. The company reported a 3.7% QoQ growth in consolidated sales and a 4.7% QoQ growth in net profits.

Performance Summary
  • Consolidated sales grew by 3.7% QoQ in rupee terms. In US$ terms, revenue growth was 3.6% QoQ. In constant currency terms, revenue growth was 2.3% QoQ.
  • Operating expenses increased by 1.6% QoQ. The operating profit grew by 18.3% QoQ. The operating margin improved sequentially to 14.5%.
  • The strong operating performance was responsible for the 4.7% QoQ growth in net profit. The net margin improved sequentially to 11%.

    Consolidated Financials
    (Rs m) 1QFY18 2QFY18 Change 1HFY17 1HFY18 Change
    Sales 73,361 76,064 3.7% 140,883 149,425 6.1%
    Expenditure 64,014 65,007 1.6% 119,891 129,021 7.6%
    Operating profit (EBITDA) 9,347 11,057 18.3% 20,993 20,404 -2.8%
    Operating profit margin (%) 12.7% 14.5%   14.9% 13.7%  
    Other income 4,107 3,222 -21.5% 3,845 7,329 90.6%
    Finance cost 370 386 4.6% 619 756 22.1%
    Depreciation 2,468 2,653 7.5% 4,466 5,121 14.7%
    Profit from associates 0 0   -25 0  
    Profit before tax 10,616 11,240 5.9% 19,727 21,856 10.8%
    Tax 2,698 2,847 5.5% 5,328 5,545 4.1%
    Minority interest -68 31   451 -37  
    Net profit 7,986 8,362 4.7% 13,948 16,347 17.2%
    Net profit margin (%) 10.9% 11.0%   9.9% 10.9%  
    No of shares (m)         976.0  
    Diluted earnings per share         31.3  
    P/E ratio #         15.0  

    # On a trailing 12-months earnings basis


    Segmental Performance
    (Rs m) 1QFY18 2QFY18 Change
    By Industry      
    Communications 33,159 33,240 0.2%
    Manufacturing 14,159 14,452 2.1%
    Technology, Media and Entertainment 4,402 4,488 2.0%
    BFSI 10,564 10,725 1.5%
    Retail, Transport and Logistics 4,989 5,477 9.8%
    Others 6,089 7,682 26.2%
    By Geography      
    Americas 34,333 34,457 0.4%
    Europe 21,862 22,819 4.4%
    Rest of the world 17,166 18,788 9.4%
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