India’s sixth largest software exporter Tech Mahindra today reported a healthy 24.7 per cent jump in net profit at Rs 377.2 crore in the fourth quarter ended March 31,helped by favourable currency movement and focus on operating matrix.
Net profit stood at Rs 302.5 crore in the January- March 2012 quarter.
“Focus on operating matrix and some currency fluctuations have helped the company post good profit. We have seen 9.2 per cent growth in dollar terms. The growth is in line with our strategy of broad-based revenue,” Tech Mahindra Managing Director C P Gurnani told reporters here.
The software firm has received a number of managed services deals,which allowed deal pipeline to remain healthy. Its active client count stood at 151 in FY’13 as against 130 in FY’12,he said.
The company,part of the USD 15.9 billion diversified Mahindra Group,posted an increase of 34 per cent in consolidated income at Rs 1,907.2 crore in the reported quarter as against Rs 1,419 crore in the year-ago period.
“We have delivered profitable growth for FY13,with significant margin improvement. We expect to see growth in the quarters ahead. This confidence is based on the strong demand that we see for telephony and data services globally,” Tech Mahindra Executive V-P Vineet Nayyar said.
Given its deep domain expertise in the telecom sector,the company will be able to leverage its leadership position,he added.
“Tech Mahindra reported better-than-expected revenue growth for Q4 FY’13,” Angel Broking Research Analyst (IT and Telecom) Ankita Somani said.
For the year ended March 2013,the IT firm’s net profit grew 17.6 per cent to Rs 1,287.8 crore,while revenue from services was up 25.2 per cent to Rs 6,873.1 crore.
For the quarter under review,North America contributed 29 per cent of the revenue,while Europe and the Rest of the World accounted for 43 per cent and 27 per cent.
“The US,I think,is on the path of economic recovery – demand is growing and we are also seeing some expansion in discretionary spends. We have done well in Asia,Africa and the Middle East. Europe continues to have issues but there is a greater sense of stability,” Nayyar maintained.
Growth in Europe is going to be “low and patchy”,he added.
The Board of Directors has recommended a dividend of Rs 5 per share (50 per cent) for 2012-13 fiscal.
Asked about revenue from UK firm BT,Nayyar said,”BT revenue has shrunk but it is still the biggest customer.”
Last year,UK telecom major BT Group exited Tech Mahindra,which was set up as a joint venture with M&M Group to develop software.
Tech Mahindra’s total headcount was lower by 1,561 people at the end of the fourth quarter (47,498) compared to the October-December 2012 period when the total headcount stood at 49,059 people.
While Tech Mahindra added 51 people for its sales and support operations,about 600 software professionals and 1,013 BPO professionals left the company in the said quarter.
The company had 24,410 software professionals,21,552 BPO professionals and 1,536 sales and support staff at the end of the fourth quarter.
“What we are doing is reducing the staff where we are not making enough money. It has to meet a certain threshold. We have a programme called cure or close. So if we can’t cure it,we close it,” Nayyar added.
Tech Mahindra’s cash and cash equivalent stood at Rs 710 crore as of March 31,2013. Its books have a debt of Rs 1,380 crore.
On the issue of merger of Mahindra Satyam with Tech Mahindra,Nayyar said,”The hearing of the case is complete. The judgement is reserved and we expect a decision to come by the second week of June.”
Shares of Tech Mahindra closed at Rs 909.75,down 1.33 per cent on the BSE.