Tech Mahindra's Q2 Results In Red: Consolidated PAT More Than Halves To Rs 494 Crore, Missed Estimates

Tech Mahindra Q2 Results: The Mahindra Group-backed IT player has declared its financial results for the quarter ending September 30, 2023 (Q2FY24), and the report card looks in red. In Q2FY24, the company earned a consolidated net profit of Rs 493.9 crore, declining by 28.7% QoQ and 61.57% YoY.

Consolidated revenue from operations also declined by 2.2% QoQ and 2% YoY to Rs 12,864 crore in the quarter.

While EBITDA stood at Rs 1,072 crore in Q2FY24, tumbling by 19.9% QoQ and 46% YoY. The company's earnings per share stood at Rs 5.6.

In dollar terms, revenue declined by 2.8% sequentially and 5.1% YoY to $1,555 million. PAT plummeted by 29.3% QoQ, and 62.5% YoY to $59 million. EBITDA stood at $129 million, registering a drop of 20.5% QoQ and 47.3% YoY, while Margins were at 8.3%, down 180 bps QoQ .

In constant currency, Tech Mahindra's revenue dipped 2.4% sequentially.

Tech Mahindra took a hit in revenue across industry levels with exceptions of manufacturing and technology. It recorded de-growth across geographical regions.

On industry-wise, revenue in Communications, Media & Entertainment (CME) took a worst hit with a drop of 11.5% YoY and 4.9% QoQ.

Majority of Indian IT companies are witnessing huge drop in CMT business. TCS had reported 12% decline YoY in this segment during Q2. Earlier, Accenture's CEO Julie Sweet revealed that the IT sector is facing lower discretionary spend, slower decision-making, and significant impact from challenges in the CMT segment. Accenture expects IT spending to weaken in the near term.

Moving on, Tech Mahindra reported decline in revenue of Banking, Financial services & Insurance (BFSI) segment by 6.3% YoY and 3% QoQ. BFSI has come under pressure after banking crises that broke out in March this year on American soil. Furthermore, Retail, Transport & Logistics segment recorded 4.6% YoY drop but a marginal upside of 0.7% QoQ, while others business dipped by 2.8% YoY and 8.4% QoQ.

It was only manufacturing and technology business where Tech Mahindra saw steady revenue growth of 5.7% YoY and 2.8% YoY in Q2FY24. But on quarter-on-quarter basis, technology revenue is down by half a percent, while manufacturing revenue is up 2.2% QoQ. That being said, Tech Mahindra's revenue was only healthy in manufacturing segment.

Coming to geographical basis, revenue declined by 8.6% YoY and 6.8% QoQ in the quarter, while Rest of world, revenue slipped by 11% YoY and 6.4% QoQ. Revenue in American market was subdued with 0.5% YoY drop and 0.7% QoQ upside.

As of September 30, 2023, Tech Mahindra's cash and cash equivalent stood at Rs 6,515 crore.