Revenue grew 24.6% to Rs 12,708 crore, surpassing analyst estimates.
According to an ET poll of analysts, year-on-year revenue growth was expected to touch 23% while profit was expected to fall only by 10%.
On a sequential basis, profit fell 24.8% and revenue grew 4.9%.
Profits during the previous fiscal quarter was much higher due to reversal of some of the provisions from special economic zone-related benefits made in the earlier quarters.
Attrition dropped to 22% compared to 24% in the previous quarter as the company started seeing synergies from its small-town campus strategy.
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“When I look at the pipeline, it is very evident that there is still a lot of demand. My pipeline has never been better,” said CP Gurnani, managing director and chief executive of
. “Many of our customers are spending money on technology despite existing headwinds like inflation, economic slowdown and supply-chain challenges,” he said.
Various parts of the world showed signs of economic crisis due to inflation, economic headwinds, energy crisis, he said.
“We are confident that we will have the opportunity to work on profitability levers over the next few quarters,” Gurnani added.
Operating margins stood at 11% in the first quarter compared to 13.2% in the previous quarter and 15.2% in the year-ago period.
This was due to investments in differentiated offerings and talent costs, the company said.
A few big European clients also saw revenue impact due to foreign currency fluctuations.
The April-June period has been marked by a massive margin contraction across the IT sector.
TCS’ margins came in at 23.1% while it was 17% for HCL Tech, below their guidance range of 26-28% and 18-20%, respectively.
, too, reported a metric of 20.1%, lower than the guided range of 21-23%. Wipro’s margins stood at 15%, down 200 basis points on-year due to talent supply expenses and additional acquisition costs.
“We have been investing in differentiated offering for the customers … including investments on freshers. So, all of that was done in the last two-three quarters which weighed on margins,” said Rohit Anand, chief financial officer, Tech Mahindra.
The company plans to increase utilisation levels and its offshoring mix as margin levers and it is already seeing pricing increase across some customer segments, he added.
The company hopes to reach 14% in terms of operating margins in the near term.
Tech Mahindra’s order book stood at $802 million in net new deals in the three-month period compared to $1.01 billion in the previous quarter and $815 million in the year-ago quarter.
The communications, media and entertainment (CME) segment won $165 million worth deals and the enterprise segment got the remaining $650 million worth of deals.
Gurnani said the company already has 60 ongoing projects under its metaverse offerings.
5G spectrum
The Mahindra group firm said it was not applying for non-public captive network spectrum opened up for non-telcos.
“Tech Mahindra believes that for overall productivity and efficiency 5G is a differentiator and the private sector should be allowed to take that spectrum at zero cost. We are not applying for the spectrum. But we would request the government to give to our end users spectrum at zero cost,” Gurnani said during the post-earnings press conference.
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He had told ET in a recent interview that technology companies should be allotted
“free spectrum” to set up private 5G networks, arguing that it would increase self-reliance and boost industry’s competitiveness in the global arena.
The company said it was on track to hire over 10,000 freshers in FY23 as it has done in the FY22 fiscal year.
Headcount grew to 158,035 from 6,862 employees. It had added 6,100 people in the previous quarter.
“The talent supply that we invested in across tier 2 cities is coming up to speed and we believe that attrition in those cities will be lesser… In about two quarters, when the tier 2 cities start delivering better output, we expect to see attrition go down to about 18%,” said Gurnani.
The company is also expecting stabilization in attrition rates due to a larger slowdown in the startup funding ecosystem.
Tech Mahindra’s net headcount addition of software professionals was low at 2,200 employees, compared to an average 4,300 addition per quarter in FY22, said Aditi Patil, research associate at brokerage Prabhudas Lilladher.
“We see continued momentum in CME on the back of IT-led spending across our client base and we see a long-term spending cycle by a lot of communication clients. On BFSI, we have touched a billion-dollar run rate last quarter and continue to see a robust growth pipeline,” said Vivek Agarwal, president- BFSI, HLS and corporate dvelopment, Tech Mahindra.
