Tech Mahindra Q2FY24 Results: Profit declines sharply; Interim Dividend announced

Profit Downturn

Tech Mahindra, a major player in the IT industry, faced a substantial fall in its consolidated profit after tax (PAT) during the second quarter (Q2). This decline was significant, with a staggering

61.1% YoY drop, resulting in a PAT of just Rs 505.3 crore. When translated into dollar terms, the PAT

dwindled to a mere $59 million, signifying a significant 62.5% decline from the same period during the last year and a substantial 29.3% decrease compared to the previous quarter in the current year.

Challenges in Revenue Generation

Tech Mahindra confronted difficulties not only in terms of dwindling profits but also in revenue generation. The company underwent a decline in Q2FY24 in consolidated revenue from operations of 5.1% compared to the previous year and a decrease of 2.8% compared with the last quarter.

Decline in Key Geographical Markets

The company’s troubles extended to geographical markets, with all key regions experiencing revenue declines. In Europe, there was a significant 8.6% decline in re­venue compared to the­ previous year, while the­ America saw a more modest 0.5% drop. The ‘Rest of the World’ also experienced a setback with an 11% YoY de­crease in reve­nue.

Drop in EBITDA 

For Q2FY24, the company’s EBITDA amounted to Rs 1,072 crore, reflecting a considerable decrease of 46% YoY and 19.9% QoQ. EBITDA margins dropped by 190 basis points QoQ and 680 basis points YoY to 8.3%.

Interim Dividend Announcement

The board of Tech Mahindra approved an interim dividend of Rs 12 per share, which is 240% of it’s share’s face value of Rs 5 each. The record date for this interim dividend is November 2, 2023, and it shall be paid to eligible shareholders on November 21, 2023.

Workforce Expansion

Despite the financial setbacks, Tech Mahindra continued to expand its workforce. In Q2FY24, the company’s total workforce increased to 1,50,604, representing a growth of 2,307 employees compared to the previous quarter.

Stock Performance

Tech Mahindra’s stock performance mirrored its financial challenges, with a decline of 1.16%. The stock closed at Rs 1,115.45 on NSE today.