Our Bureau IT services firm Tech Mahindra reported a 27.2 per cent jump in net profit at ₹1,064 crore for the second quarter ended September 30, driven by rupee depreciation and efficiency improvements. The firm made ₹836.2- crore net profit in the same quarter last year.

Tech Mahindra’s revenue from operations was up 13.4 per cent to ₹8,629.8 crore during the quarter (₹7,606.4 crore).

In dollar terms, the net profit was up nearly 15.6 per cent to $149.4 million, while revenue rose 3.3 per cent to $1.21 billion in the quarter.

The company gained 80 basis points from currency depreciation while earning another 120 basis points from efficiency improvements.

Its digital revenue share went up to 31 per cent in the quarter under review from the previous sequential quarter. “I am very happy with not only our digital footprint but also with our operating margins. I’m quite confident that because of the large deals we’ve won last quarter, which made it our best quarter in terms of winning deals, it gives me confidence that communications business is bouncing back,” Tech Mahindra CEO and Managing Director CP Gurnani said.

Tech Mahindra won three deals in the communications business worth about $300 million.

Gurnani said the decline in the enterprise business was caused by the drop in healthcare revenue and barring that all other verticals performed well. The company had in the past indicated there would be a decline as two large projects came to a closure.

“In terms of enterprise business, if I take out the healthcare revenue, the growth was about 2.6 per cent quarter on quarter,” Gurnani said. “Our margins have been improving quarter-on-quarter and we believe we still have scope to improve them further,” he said. Gurnani said 5G auctions in Europe will help fuel more investments in the communications business where companies are going beyond telecommunication technologies and looking at building media and entertainment platforms as well.

5G centre

Tech Mahindra is also building a 5G centre of excellence for the Japanese market, Gurnani said.

Cash and cash-equivalent for the company stood at ₹7,900 crore as of September 30, while its active client count was at 930.

The company added 4,839 people in the September quarter taking the total headcount to 118,391. The software headcount was at 72,534, while that in BPO was 39,407.

“This has been a strong quarter with improving operating metrics across most of our business lines. Our focus on optimising our operations has led us to the highest EBITDA level and margin improvement in excess of 2 per cent sequentially and 4 per cent on a year-on-year basis,” CFO Manoj Bhat said.