Fifth largest software exporter Tech Mahindra Tuesday reported a 27.5 percent jump in its December quarter net at Rs 1,203 crore, driven by automation measures which widened the profit margins. The Mahindra group company, which reported an increase in profit margins for the seventh consecutive quarter, however, said that the incremental profit margin rise will not be the same as earlier.
The company's overall revenue increased 15 percent to Rs 8,944 crore for the reporting quarter, making it into a USD 5 billion annual top line on an annualised basis. The pre-tax profit margin widened by 3 percentage points to 19.3 per cent for the reporting period on operational improvements through higher automation and better utilisation, its managing director and chief executive C P Gurnani told reporters.
Chief of corporate strategy Vivek Agrawal said many of the automation solutions have been developed in-house or through companies in which it has invested, while chief financial officer Manoj Bhat said the same solutions have been implemented at top-100 customers. However, Gurnani made it clear that the pace of margin increase may not be maintained from here on and also added that certain events may also lead to fall in margins.
On the flip side, there is pressure on the margins because of the increase in wage costs as well as investments for the future which the company is doing, Bhat said. The share of the upcoming digital revenues which deliver wider margins grew to 33 percent of the revenue base.
After many quarters of sluggish growth, the mainstay of telecom and communications vertical reported a 2.6 percent growth in revenues during the reporting quarter over the preceding one, while the enterprise segment grew 4 percent. Gurnani said he expects 5G rollouts -- identified earlier as a key opportunity -- to start by end of this year, resulting in revenue accretion from second quarter of the next fiscal onwards.
Agrawal said the company will continue scouting for both the small "tuck-in" acquisitions for skill sets that it has done recently and will also not shy away from large transformative deals which will take its revenues higher. Company officials declined to speak on whether it is in talks to pick up the promoter stake in Mindtree. The amount of cash and equivalents which the company is carrying stood at USD 1.25 billion as on December 31.
The company's overall headcount stood at 1.21 lakh employees as of December 31 with the BPO arm accounting for 43,439 people. It added 3,451 people on a net basis during the quarter. The company scrip closed flat at Rs 750 a piece on the BSE, in line with the close on the benchmark..