India’s fifth largest IT services player Tech Mahindra reported net profit of Rs 1,506 crore for the fourth quarter of FY22, up 39.2 per cent year-on-year and was up 10 per cent sequentially. Revenue buoyed by growth in both its telecom and enterprises segment was up 24.5 per cent year-on-year at Rs 12,116 crore up 5.8 per cent sequentially. In US dollar terms revenue for the quarter was up 5.4 per cent at constant currency at $1.6 billion.
“FY22 was all about taking some bold steps with our Nxt.Now strategy. With TechMVerse, 5G, AI, Cloud and connected solutions all coming together to bring the NXT.Now experience to our customers and this has been our biggest achievement last year. This is the best performance in terms of growth in the last seven years,” said C P Gurnani, MD and CEO, Tech Mahindra.
For the full year Tech Mahindra almost reached the revenue mark of $6 billion. For FY22 the company reported revenue of $5.99 billion.
For Q4 the company had a total TCV of $1 billion. This was equally distributed between the enterprise and CME segment. The $1 billion TCV included a large green field 5G project in Europe. For the full year the company’s TCV was at $3.3 billion a growth of 50 per cent from last year.
Tech Mahindra for FY22 invested about $900 million in acquisitions. “Our stated intent on M&A is about filling whitespaces in our capability stack and our offerings to our customers. Last 18 months we’ve been very busy plugging a lot of gaps in our portfolio with a number of acquisitions. I think as we go into FY 23, we will be very focused on integrating those acquisitions, driving synergy, building new propositions and new service offerings to our clients,” said Agrwal.
For FY23 growth will be driven by 5G and the enterprise segment. “We do expect CME, and media and entertainment to see good uptake in the TechMVerse offerings. We’re looking at that as a big growth opportunity. Our BFSI segment for the first time crossed the $1 billion milestone. We’ve had a great fiscal year in 2020-21 with a 19% year on year growth and we do expect to keep that momentum going into fiscal 23,” said Vivek Agarwal, president BFSI, HLS and corporate development.
Even though the company’s topline and profits were better than street estimated margins were impacted due to supply side constraints, higher salary and lower utilization. EBIT margins for the quarter were down 160 basis points to 13.2 per cent.
But this seems to have worked as attrition on a quarter on quarter basis was marginally down. Attrition for the quarter fourth came in at 23.5 per cent on LTM basis, from 24 per cent in Q3FY22. Attrition was still high on a year on year basis. It was 13 per cent in Q4FY21.
The company which hired 10,000 freshers for FY22 is looking at balancing its employee pyramid by hiring more from the colleges. “Our focus is to make the company a more efficient organization from a cost perspective. We have hired more than 10,000 from campuses last fiscal. And our strategy is to continue on that path,” said Rohit Anand, the newly appointed CFO. He will take over from the current CFO Milind Kulkarni effective June 1, 2022.
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