• Revenue: USD 1,589 million, 1.9% QoQ growth, 2.2% YoY growth.

• EBIT Margin: 9.6%, 110 basis points sequential expansion.

• Profit After Tax (PAT): USD 149 million, PAT margin of 9.4%.

• Free Cash Flow: USD 157 million, 105.4% of PAT.

• New Deal Win TCV: USD 603 million.

• Interim Dividend: INR 15 per share.

• Cash and Cash Equivalents: USD 784 million.

• Employee Count: 154,273, including 2,000+ freshers onboarded this quarter.

• Warning! GuruFocus has detected 10 Warning Signs with BOM:532755.

Release Date: October 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tech Mahindra Ltd (BOM:532755) reported a year-over-year growth in several key verticals, including BFSI (4.5%), healthcare and life sciences (4.5%), and retail (4.7%).

• The company achieved a new deal win TCV of $603 million for the quarter, indicating strong deal momentum across key markets.

• Tech Mahindra Ltd (BOM:532755) posted an EBIT margin of 9.6% for the quarter, with a sequential expansion of 110 basis points, driven by cost savings and currency tailwinds.

• The company announced several strategic partnerships, including collaborations with Microsoft and Google Cloud, enhancing its service portfolio and client value.

• Tech Mahindra Ltd (BOM:532755) received multiple awards and recognitions, such as the 2024 Supplier Excellence Award from Navistar and the Diamond Supplier Award from Bombardier, highlighting its industry leadership and commitment to sustainability.

Negative Points

• The manufacturing segment experienced a decline of 4% due to softness in the auto sector, impacting overall growth.

• Despite improvements, the communication vertical showed a year-over-year decline of 1.7%, indicating ongoing challenges in this sector.

• The company faces significant budget pressures from top telecom clients, particularly in the US, affecting revenue from these accounts.

• Tech Mahindra Ltd (BOM:532755) is in a turnaround phase, with the CEO acknowledging potential volatility in the current year.

• The offshore headcount mix increased, but the corresponding revenue growth did not fully reflect this shift, suggesting potential inefficiencies or underutilization.

Q & A Highlights

Q: How much of the 150 basis points investment for Project Fortius has been utilized in the first half, and what are the expectations for the second half? A: Rohit Anand, CFO, explained that the investment is being accelerated into Q1 and Q2, with the second half expected to be slightly heavier. The focus is on setting the right platform for FY27 goals, balancing short-term metrics with long-term investments.