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Tech Mahindra: A Strong Operating Performance - Views on News from Equitymaster
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Tech Mahindra: A Strong Operating Performance
Dec 29, 2016

Tech Mahindra has announced its second quarter results for FY17. The company reported a 3.6% QoQ growth in consolidated sales and a 21.4% QoQ fall in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated sales grew by 3.6% QoQ in rupee terms. In US$ terms, revenue growth was 4% QoQ. In constant currency terms, revenue growth was 5% QoQ.
  • Operating expenses increased by 3.5% QoQ. The operating profit grew by 4% QoQ. The operating margin was flat sequentially at 14.9%.
  • A 43.6% QoQ fall in other income, a 26% QoQ jump in finance costs as well as a 21.2% QoQ jump in depreciation contributed to the sequential fall in the bottomline. The net profit fell by 21.4% QoQ.

    Consolidated financial snapshot
    (Rs m) 1QFY17 2QFY17 Change 1HFY16 1HFY17 Change
    Sales 69,209 71,674 3.6% 129,094 140,883 9.1%
    Expenditure 58,918 60,973 3.5% 109,176 119,891 9.8%
    Operating profit (EBITDA) 10,292 10,701 4.0% 19,918 20,993 5.4%
    Operating profit margin (%) 14.9% 14.9% 15.4% 14.9%
    Other income 2,458 1,387 -43.6% 2,222 3,845 73.0%
    Finance cost 274 345 26.0% 390 619 58.9%
    Depreciation 2,019 2,448 21.2% 3,689 4,466 21.1%
    Exceptional items 0 0 0 0
    Profit before tax 10,457 9,296 -11.1% 18,061 19,752 9.4%
    Tax 2,468 2,860 15.9% 4,047 5,328 31.6%
    Minority interest 469 -72 50 397 692.0%
    Profit from assosiates -23 -2 15 -25
    Profit after tax/(loss) 7,496 6,506 -13.2% 13,978 14,003 0.2%
    Other comprehensive income 628 -123 -119.6% -342 505 -247.6%
    Net profit 8,124 6,383 -21.4% 13,636 14,507 6.4%
    Net profit margin (%) 11.7% 8.9% 10.6% 10.3%
    No of shares (m) 972.0
    Diluted earnings per share 33.0
    P/E ratio # 14.6
    # On a trailing 12-months earnings
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