Tech Mahindra Q2 Earnings: Profit Surges 153% YoY, Interim Dividend Declared

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Tech Mahindra Q2 Earnings: Profit Surges 153% YoY, Interim Dividend Declared

Tech Mahindra declared an interim dividend of Rs 15 per share. The company has fixed November 1, 2024 as the record date for determining the members entitled to receive the Interim dividend.

October 19th, 2024 News

Tech Mahindra announced its Q2 earnings for the fiscal year ending September 30, 2024, reporting an impressive net profit of ₹1,250 crore, marking a 153.1% year-on-year (YoY) increase. The company also declared an interim dividend of ₹15 per share, with November 1, 2024, set as the record date for shareholders to be eligible for the dividend.

Key Financial Highlights:

Net Profit: ₹1,250 crore, up by 153.1% YoY and 46.8% quarter-on-quarter (QoQ).
Revenue: ₹13,313 crore, a 3.5% YoY and 2.4% QoQ growth.
EBIT Margin: 9.6%, an improvement of 110 basis points (bps) from the previous quarter.
Total Contract Value (TCV): Deal TCV for Q2 stood at $603 million, up from $534 million in the previous quarter.

Outperforming Market Expectations

Tech Mahindra’s revenue and profit exceeded market predictions. According to a Moneycontrol Poll of 11 brokerages, the expected revenue was ₹13,171 crore with an estimated net profit of ₹1,036 crore. The company’s actual figures exceeded these expectations, reflecting the effectiveness of its ongoing restructuring efforts under the new management led by CEO and Managing Director Mohit Joshi.

Joshi commented on the results, saying, "We continue to progress on our strategic improvement efforts even as the overall IT services industry has remained soft. Our focus on strengthening client relationships and operational excellence has contributed to an expansion of margins for the third consecutive quarter."

Sequential Growth

Sequentially, the company’s net profit grew by 46.8%, while its revenue rose by 2.4%. The improvement in EBIT margin to 9.6%, up from 8.5% in the previous quarter, highlights the company's operational progress under its new restructuring strategy, particularly through the implementation of Project Fortius.

Rohit Anand, Chief Financial Officer of Tech Mahindra, added, “This quarter we see consistent performance around increasing deal wins, revenue growth, cost optimization, and steady free cash flow generation. In line with our capital allocation policy, the board has declared an interim dividend of ₹15 per share.”

Headcount and Attrition

Tech Mahindra’s total headcount increased by 6,653 sequentially, reaching a total of 154,273 employees. The company also witnessed a rise in attrition, with the last-twelve-month (LTM) figure increasing to 10.6%, compared to 10% in the previous quarter.

Conclusion

Tech Mahindra’s strong Q2 performance, marked by its 153% YoY profit surge and consistent revenue growth, reflects the success of its strategic initiatives aimed at operational excellence. With a robust pipeline of deals and continued focus on expanding client relationships, the company is on track to achieve its long-term goals, further solidified by the declared interim dividend for its shareholders.