Tech Mahindra: Quarterly Result update
02-02-2022

Tech Mahindra | Market Cap Rs. 1,46,330 Cr

CMP 1457 | P/E 23x FY23

Results: Tech Mahindra (TechM) reported 5.2% growth quarter on quarter and 18.7% over previous year. Operating profit growth was 8.7% over previous year due to higher subcontracting costs

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Key Highlights:

  • Communications is back on a strong growth trajectory. Communications which is dominant portion of business (~40%) grew 6.9% sequentially and 18.3% YoY
  • Total headcount by the end of quarter was 1,45,067 (vs 1,41,193 in previous quarter), although headcount increase was strong, but still behind peers.
  • Attrition rate also increased to 24% (vs 21% in previous quarter).
  • Company won net new deals worth $704 mn during the quarter out of which $226 mn is from Communication, Media & Entertainment and the rest from Enterprise business.
  • 4th consecutive quarter of US$700mn+ deal wins strengthens our faith in growth prospects

Outlook: With respect to 5G, the company highlighted that their focus is towards digital cloud integration and believe there is a lot of headroom for growth. It expects to deliver an EBIT margin of 15%+ in FY22. In FY23, supply side challenges are expected to continue, some of which, the company hopes to mitigate through increased fresher hiring.

No specific guidance given for FY23, however, the commentary on growth and margins is positive for the foreseeable future basis robust pipeline and focus on consistent large deal wins.


 

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