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Tech Mahindra: A good operating performance - Views on News from Equitymaster
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Tech Mahindra: A good operating performance
Nov 17, 2015

Tech Mahindra has announced its second quarter results for FY16. The company reported a 5.1% QoQ growth in consolidated sales and a 16.2% QoQ rise in net profits. Here is our analysis of the results.

Performance summary

  • Consolidated net sales grew by 5.1% QoQ. In US$ terms, revenue growth was 2.2% QoQ.
  • Operating expenses increased by 3.1% QoQ, largely because of a modest 3.8% QoQ increase in employee costs. Thus, the operating profits were higher by 16.1% QoQ. The operating margin improved to 16.6% compared to 15% seen in 1QFY16.
  • The strong operating performance was responsible for the rise in net profit by 16.2% QoQ.

Consolidated financial snapshot

(Rs m) 1QFY16 2QFY16 Change 1HFY15 1HFY16 Change
Sales 62,938 66,155 5.1% 106,094 129,094 21.7%
Expenditure 53,493 55,145 3.1% 85,625 108,638 26.9%
Operating profit (EBITDA) 9,445 11,011 16.6% 20,470 20,456 -0.1%
Operating profit margin (%) 15.0% 16.6%   19.3% 15.8%  
Other income 1,366 1,658 21.4% 1,468 3,024 106.0%
Finance cost 214 173 -19.3% 294 387 31.4%
Depreciation 1,733 1,974 13.9% 2,917 3,707 27.1%
Exceptional items - -   - -  
Profit before tax 8,864 10,522 18.7% 18,727 19,386 3.5%
Tax 2,099 2,605 24.1% 5,114 4,703 -8.0%
Minority interest 15 65 330.3% 109 81 -25.9%
Profit from assosiates 11 4 -63.6% - 15  
Profit after tax/(loss) 6,761 7,856 16.2% 13,504 14,617 8.2%
Net profit margin (%) 10.7% 11.9%   12.7% 11.3%  
No of shares (m)         962.3  
Diluted earnings per share         28.5  
P/E ratio#         18.1  

# On a trailing 12-months earnings basis

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