Tech Mahindra Q2 operating profits up 14.8% up at Rs1,331cr

Tech Mahindra Q2 operating profits up 14.8% up at Rs1,331cr

Tech Mahindra reported an increase of 3.33% in top line sales for the Sep-20 quarter at Rs9,371.80cr. The operating profits for the quarter ended Sep-20 were up by 14.82% at Rs1,331cr while the net profits were down 1.33% at Rs1,063.10cr on a yoy basis.

This had a proportionate impact on the margins of the company too. For the Sep-20 quarter, the operating profit margins or OPM expanded by 143 basis points at 14.21% while the net profit margins or NPM for the quarter was down 90 bps at 11.34% due to a sharp fall in the other income component in the top line.

Financial highlights for Sep-20 compared yoy and sequentially

Particulars Sep-20 Quarter Growth (yoy) Growth (qoq)
Total Revenues Rs9,371.80cr +3.33% +2.92%
Operating Profit Rs1,331.30cr +14.83% +45.13%
Net Profits Rs1.063.10cr -4.33% +11.25%
Key Ratios Sep-20 Quarter Sep-19 Quarter Jun-20 Quarter
Diluted EPS Rs12.11 Rs12.78 Rs11.07
Operating Margins 14.21% 12.78% 10.07%
Net Profit Margin 11.34% 12.25% 10.49%

Key takeaways from the Sep-20 quarter results

  • The COVID impact on revenues was not substantial as is evident from the performance in the Jun-20 quarter. However, in the Sep-20 quarter, the other income component fell sharply leading to a fall in net profit despite a rise in operating profit.

  • In terms of revenue mix, 90% of the revenues came from the IT business while the balance 10% came from the BPO business. Net cash generated from operating activities was up 3-fold in the H1 at Rs4,629cr on favorable trade receivables movement.

  • The total headcount of Tech Mahindra stood at 1.24 lakhs while the active client list stood at 988 as of Sep-20. To expand its digital portfolio, Tech Mahindra completed the acquisition of Momenton, a digital enterprise technology firm during the quarter.