Tech Mahindra revenue drops 5% to $6.27 bn as clients defer tech spending

Tech Mahindra has posted revenue of $1,548 million (down1.6 percent QoQ and down 7.2 percent YoY) during January-March 2024.
Tech Mahindra Lab
Tech Mahindra’s profit was $79 million (up 29.5 percent QoQ and down 41.5 percent YoY) during January-March 2024.

Tech Mahindra has reported revenue of $6,277 million (down 5.0 percent) with a profit of $284 million (down 52.2 percent) during the financial year 2023-24.

Tech Mahindra, India’s No.5 IT company, said new order inflows reached $500 million in Q4FY24 against $381 million in Q3FY24.

The number of employees at Tech Mahindra reached 145,455 (down795QoQ) at the end of March 2024. Tech Mahindra noted that employee attrition fell to 10 percent in Q4FY24 and utilization ex. trainees fell 200 bps to 86 percent in Q4FY24.

“As we step into FY’25, we look forward to improvement in clients spending, which fuels our optimism for a better revenue performance ahead. Our unique ability to enable customers with transformative scale at unparalleled speed, differentiates us from competitors,” Mohit Joshi, Chief Executive Officer and Managing Director of Tech Mahindra, said.

Tech Mahindra’s Q4FY24 results reflect the ongoing weak demand environment, leading companies to focus on improving margins through cost optimization. However, the inability to decrease subcontracting expenses and lower utilization makes us wary of the company’s approach towards efficiently managing resources, DK Mudaraddi, Research Analyst, StoxBox, said.

“The reduction in client spending has dented the company’s performance despite achieving healthy growth in deal signings during the quarter. Key monitorables going forward would include – FY25E sales growth & margin outlook, demand commentary related to 5G technology, ramp-up of new businesses, deal pipeline, client decision-making for the same, and strategy roadmap under the leadership of a newly appointed CEO,” DK Mudaraddi said.

Tech Mahindra earlier announced a three-year turnaround plan, aimed at increasing revenue and doubling operating margin to 15 percent by fiscal 2027.

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