Tech Mahindra posts Rs.276 crore profit

MUMBAI, INDIA: Tech Mahindra, India’s fifth largest software exporter, on Wednesday reported Rs.276 crore net profit with total revenue of Rs1,445 crore for the third quarter ended on December 31, 2011.

The company’s net profit jumped by 7.4 per cent on yearly (Y-o-Y) basis while its revenue increased by 8.4 percent on quarterly (Q-o-Q) basis.

“It has been a satisfactory quarter despite the challenging uncertain economic environment and Europe crisis.”

“There’s a change in customer behaviours, decision making cycles are getting longer and even though IT spend is flat there’s a growing demand for off-shoring,” Vineet Nayyar, vice chairman, MD & CEO of Tech Mahindra, said.

The Mahindra Group reported 14.7 per cent quarterly increase in its operating profit (EBITDA) at Rs.234 crore against Rs.204 for the third quarter previous year.

However, geographically, company’s revenue growth in North America was flat at 33 per cent, Europe dropped to 45 per cent while the rest of the world grew by 22 per cent during Q3.

“Eurozone crisis will help us with considerable opportunities. Our move away from the traditional IT business into operations is helping us grow. We are seeing opportunities in operations with telcos and that is giving us optimism going forward,” Nayyar commented.

Further on Tech Mahindra’s low performance in Europe, he said, “It as a periodic cycle (growth) and will continue with low growth in the next quarter as well but will increase later on.”

The company is facing a considerable pricing pressure and price competitiveness but for company like us there’s lot of opportunity ahead, according to Nayyar.

Though Tech Mahindra at large earns revenues from British Telecom’s (BT) customers, it saw 4 percent dip in Q3. Pointing at company’s satisfactory performance, CFO Sonjoy Anand said, “BT revenue fell by 4 percent, billing days were low due to the Christmas festival and few projects are under transition.”

During the third quarter, company’s onsite revenue contributed by 39 per cent and rest 61 per cent came from offshore. The IT utilization rate, including trainees and internal project, stood at 73 per cent while attrition was around 20 per cent.