Tech Mahindra Q2 Results: Net profit zooms 153% to ₹1,250 crore, revenue up 3.5% YoY; dividend declared

IT services firm Tech Mahindra on Saturday reported a more than two-fold jump in its consolidated net profit to ₹1,250 crore for the July-September quarter, driven by special income from the sale of assets and growth in European and other non-American markets, as well as the banking, financial services, and insurance (BFSI) segment.

The Mahindra Group company posted a net profit of ₹493.9 crore in the year-ago period, according to an exchange filing. Revenue rose by 3.49 per cent to ₹13,313.2 crore in the second quarter of 2024-25 compared to ₹12,863.9 crore in the same quarter of 2023-24.

“Other income includes gain on sale of property of ₹4,502 million which comprises of freehold land and its related buildings along with the furniture & fixtures sold for a consideration of ₹5,350 million, receivable over a period of four years along with interest of 8.2 per cent p.a,” the company filing said.

Sequentially, net profit rose by 46.81 per cent and revenue by 2.36 per cent. “We continue to progress on our strategic improvement efforts even as the overall IT services industry has remained soft. Tech Mahindra’s order bookings fell to $603 million from $640 million in the same quarter last year.

“We have focused on strengthening client relationships and expanding the partner ecosystem while maintaining a sharp focus on operational excellence through project Fortius, which has resulted in an expansion of margins for the third sequential quarter,” Tech Mahindra CEO Mohit Joshi said.

The CEO unveiled Project Fortius in April, a three-year plan to achieve a 15 per cent operating margin with a focus on organic growth. Tech Mahindra continued to see weakness in its communications segment, which contributes a third of overall revenue.

“This quarter we see consistent performance around increasing deal wins, revenue growth, cost optimisation and steady free cash flow generation as we continue our journey towards FY27 stated targets. In line with our capital allocation policy the board has declared an interim dividend of ₹15 per share,” Tech Mahindra CFO Rohit Anand said.

The company’s TCV (Total Contract Value), or net new deal wins, stood at USD 603 million in the second quarter of FY25. Joshi further said the company is on the right path for a long-term sustainable transformation, with its leading indicators moving in the right direction, and its ‘Scale at Speed’ narrative resonating in the market.

“We have invested in strengthening the capabilities in the focus service lines by broadening the leadership and investing in technical specializations. “We continue to invest in strengthening our fresher hiring program, building the right mindset and future skilling and associates, by building capabilities in AI-first and cloud-first skill sets,” he told reporters.

Investments shall continue in creating and sustaining an outcome-driven learning organisation and cultivating a high-performance culture based on the pillars of simplifying, clarifying, innovating and driving a high-performance orientation, he added.

This year could be volatile because we are in the turnaround phase, Joshi said. “I am confident, however, that the platform is being set for a long-term, valuable franchise thanks to a high-calibre and united leadership team and a clearly articulated strategic plan,” Joshi said.

The Pune-based firm registered revenue growth of 4.5% in its BFSI segment, and 2.4% in its Hi-Tech and Media segment, with Europe up 4.1% and its the Rest of World market growing 9.7%.

In April, the firm unveiled a three-year turnaround plan aimed at increasing revenue and doubling its operating margin to 15% by fiscal 2027 after multiple quarters of slowing growth and a significant decline in its margins.

Joshi said this was the early stages of turnaround for the business, and that they expect “to see some volatility in the telecom and the BFSI portfolios” going ahead.

The Pune-headquartered firm added 6,653 employees during the quarter under review, bringing the total staff count to 1,54,273. Shares of Tech Mahindra settled at ₹1,688 apiece on the BSE on Friday, down 0.68 per cent from the previous close.