Software exporter Tech Mahindra on Monday reported a 26 percent increase in its September quarter net at Rs 1,338.7 crore and expects to maintain the trajectory. The Mahindra Group company's overall revenue was up 16.1 percent at Rs 10,881.3 crore in the second quarter of this fiscal and higher by 6.4 percent highest in a decade when compared with the preceding June quarter. It had a net profit of Rs 1,064.6 crore in the July-September quarter of 2020.

According to a CNBC-TV18 poll, the profit was estimate at around Rs 1,357 crore and revenue at Rs 10,660 crore. The EBIT was expected at Rs 1,615 crore.

Tech Mahindra's arms to buy two cos for Rs 885 cr https://t.co/787L8XrpUr

— CNBC-TV18 (@CNBCTV18Live) October 25, 2021

The company also flagged supply-side challenges as demand for talent increases and blamed those for restricting its operating profit margins which stood flat as costs due to attrition and sub-contracting went up.

Its attrition climbed to 21 percent at the end of September as against 14 percent in the year-ago period and 17 percent in June. Tech Mahindra's Managing Director and Chief Executive C P Gurnani said attrition is a "complex" situation arising out of the higher demand for talent but expressed satisfaction at how the company has been able to manage it.

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Interestingly, he mentioned that the company has seen higher attrition in bigger cities like Bengaluru, Hyderabad and Pune while Bhubaneswar and Nagpur have seen lower levels. Keeping this in mind, the company is looking at how project work can be done from various locations simultaneously and is continuing with strategies, including new hiring and re-skilling. The company hired over 14,000 employees during the September quarter to take its overall base to over 1.41 lakh, Gurnani said.

Tech Mahindra reported new deals of USD 750 million for the quarter and a large part of the same was coming from legacy systems' digital transformation, Gurnani said, adding that it expects to continue with the trajectory going ahead even if every quarter will not be a new high. He also said the operating profit margin which came flat at 15.2 percent can be maintained or go up through levers like supply chain management.

Its investments in 5G, customer relationship management, auto and design are giving good benefits. The largest verticals of communication, media and entertainment, and enterprises, are also doing well, Gurnani said. The company also announced two acquisitions on Monday, including that of Lodestone, a digital engineering company, for which it will be paying USD 62 million upfront and the enterprise value is USD 105 million.

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Besides, Tech Mahindra declared a special dividend of Rs 15 per share. Gurnani affirmed that it will continue delivering excess cash to shareholders. The cash and equivalents stood at USD 1.625 billion as of September 30.

Shares of the company closed 0.42 percent up at Rs 1,524.40 apiece on the BSE.

(With inputs from PTI)

(Edited by : Priyanka Deshpande)

First Published:Oct 25, 2021 7:15 PM IST