Tech Mahindra Q2 results update
Last updated: 24 Oct, 2020 | 12:02 pm
- Profit beats estimates: Tech Mahindra has reported a 9.5% on-quarter rise in net profit to ₹1,065 crore in Jul-Sep quarter, beating analyst estimates. Analysts had earlier estimated a profit of about ₹980 crore. The bottomline was aided by strong operating growth.
- Revenue up: The company\u2019s revenue came in at ₹99,372 crore, up 3% as compared to the Apr-Jun 20 period. Both of the segments posted a strong rise in revenues. Communications business saw a 3.2% dollar revenue growth, while enterprise segment reported 5.9% sequential rise in dollar revenue growth.
- Operating margins improve: Earnings before interest and tax (EBIT) jumped 45.1% QoQ to Rs 1,331.3 crore and margin expanded by 10.1% to 14.2% in Q2. The margin expansion was supported by a fall in SGA expenses (down by 3.9% QoQ) and cost of services (down 1.3% QoQ).
- New acquisitions: Tech Mahindra announced the strategic acquisition of Momenton, a digital enterprise technology firm, offering consultancy and implementation services, and Tenzing Limited, a technology consulting company. The company has acquired 100% equity in both the organizations. The deals will help Tech Mahindra to enable digital capabilities for customers in the ANZ (Australia and New Zealand), specifically in Financial Services.
- Dividend: Tech Mahindra has also declared a special dividend of Rs 15 per share that will be paid on Nov. 12. The record date is fixed as Nov 2.
Tech Mahindra has posted a strong set of numbers aided by demand revival across multiple segments. The Covid-19 pandemic has forced a tectonic shift in businesses processes to move towards greater digitization. In fact, Tech Mahindra has said that many of its customers are adopting new-age technologies as businesses across the globe are actively pursuing digital transformation. This has helped the company to capture increased spends on consumerization, as businesses try to stay relevant in the current environment. The growth in Q2FY21 has improved visibility for the rest of the year for Tech Mahindra. The company is also confident of further expanding its revenues and margins going forward.