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IT services company Tech Mahindra has recorded a 3.6 per cent dip in net profit for the fourth quarter ended March 31, 2014 largely due to higher forex losses and an increase in tax outgo.
The Mahindra group company’s net profit stood at ₹614.2 crore compared with ₹637.7 crore in the corresponding year ago period.
Revenue went up by 34.26 per cent to ₹5,058.1 crore (₹3,767.3 crore). The company's consolidated revenue for Q4 includes financials of the erstwhile Mahindra Satyam which merged last July. However, it had not obtained an audit opinion for the financials of the merged entities, the company said.
Higher tax outgo In the fourth quarter, Tech Mahindra’s forex loss increased to ₹167 crore from ₹5.81 core in the same quarter a year ago. The rupee had strengthened by 3.14 per cent to the US dollar during this period. Provision for taxes increased by 43.18 per cent to ₹209.2 crore (₹146.1 crore).
For the current fiscal, the company management has painted an optimistic picture. CP Gurnani, Managing Director & Chief Executive Officer, said the company’s endeavour is to beat industry body Nasscom’s estimates of 14-16 per cent growth for the industry. The company is particularly bullish on its network services business.
“Our network services business is currently the fastest growing portion of the business. We continue to add more muscle on this front,” said Gurnani.
Analysts said that the contribution of British Telecom (one of the company’s largest clients) to Tech Mahindra’s revenues is expected to decline going forward due to slowing IT spends by the telecommunications giant.
Vineet Nayyar, Executive Vice-Chairman, said: “The US economy grew faster than anticipated in the second half of 2013. However, we see growing tensions between the US and Russia over the crisis in Ukraine as a risk factor.”
For the full year ended March 31, 2014, the Pune-headquartered company reported a 55 per cent rise in net profit to ₹3,029 crore while revenue went up 31.4 per cent to ₹18,831 crore.
Its revenue from the retail vertical grew 22 per cent year-on-year while revenues from financial services increased by 47 per cent. The Tech Mahindra board has proposed a dividend of ₹20 per share for the previous financial year. Ahead of the results announcement, shares of Tech Mahindra closed 0.91 per cent higher at ₹1,838.15 on the Bombay Stock Exchange.
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