Top Indian Companies: Tech Mahindra Ltd

Tech Mahindra is an Indian multinational information technology services and consulting company. Part of the Mahindra Group, the company is headquartered in Pune .

Tech Mahindra started a joint venture with British Telecom in 1986 as a technology outsourcing firm. In December 2010, British Telecom sold 5.5 per cent of its stake in Tech Mahindra to Mahindra & Mahindra for Rs 451 crore.

Acquisitions

Merger with Mahindra Satyam

Tech Mahindra announced its merger with Mahindra Satyam on March 21, 2012, to create an IT company worth US$ 2.5 billion.

In 2014, Tech Mahindra acquired Lightbridge Communications Corporation (LCC), the largest independent telecom services company in the world with local presence in over 50 countries.

In 2015, Tech Mahindra acquired SOFGEN Holdings, a 450-employee Swiss IT firm serving the financial services industry.

In 2019, Tech Mahindra acquired DynaCommerce BV. Tech Mahindra, during September 2019, has acquired BORN Group, a New York City based digital content and production agency, for $95 million in an all-cash deal.

In March 2021, Tech Mahindra partnered with US-based business intelligence analytics company ThoughtSpot. In April 2021, Tech Mahindra acquired US-based DigitalOnUs, a hybrid cloud and DevOps services provider for $120 million.

Tech Mahindra has offices in more than 60 countries.

India: Bangalore, Bhubaneswar, Chandigarh, Chennai, Gandhinagar, Gurgaon, Hyderabad, Kolkata, Mumbai, Mysore, Noida, Nagpur, Pune, Visakhapatnam, and Warangal

Share holding Pattern

Holder's Name No of Shares % Share Holding

No Of Shares 970589953 100%

Promoters 345982521 35.65%

Foreign Institutions 343072668 35.35%

Banks Mutual Funds 93155925 9.6%

Central Govt 1637380 0.17%

Others 31019225 3.2%

General Public 81352420 8.38%

Financial Institutions 74067578 7.63%

Foreign Promoter 242904 0.03%

GDR 59332 0.01%

FY2023 Q4 and Full Year Result

The Fifth biggest IT company by revenues on Thursday reported a 34.69 per cent decline in its March quarter net at Rs 1,117.8 crore due to narrowing profit margins.

For the entire fiscal, its profit after tax came down to Rs 4,831.5 crore as against Rs 5,566 crore in FY22.

Its overall revenue grew by over 13 per cent to Rs 13,718 crore in the reporting quarter, and almost flat when compared to the preceding December quarter.

Its total contract value nearly halved to USD 592 million as against 1.011 billion in the year-ago period, and was lower than the USD 795 million in new deal wins in the preceding December quarter.

A slew of its peers, who have reported numbers for the March quarter, are speaking about macroeconomic volatilities in the largest market of the US impacting their business as clients defer their IT spends.

The Mahindra group company hopes that there can be a resurgence in IT spends and all the investments which it has done will come in handy, its chief executive C P Gurnani told reporters.

He admitted that the geopolitical scenario and war have pushed it into a difficult situation, but its experience of the past crisis has taught it to never waste a crisis.

Countries rich in minerals, commodities and energy, along with the ones possessing large consumer bases, will be driving the future spends in technology, and the company is pivoting to tap into the potential, he said.

Its chief financial officer Rohit Anand said the rising wage inflation due to the supply side challenges was the primary reason limiting the operating profit margin at 11.2 per net as against 13.2 per cent in the year-ago period and 12 per cent in the preceding quarter.

The company did benefit on the margin front through a one per cent jump in its pricing power and a reduction in sub-contracting costs, and will continue to deploy the same to help the business going forward as well.

It reduced its workforce by over 4,600 employees during the quarter to get the overall staff strength to just above 1.50 lakh, which Anand attributed to a phase of consolidation.

Gurnani said going forward, the company will look at monetising its patents better and added that there is a larger scope for revenues by serving companies in the Mahindra Group itself. He also said that the overall deal pipeline is strong.

Its board on Thursday recommended a final dividend of Rs 32 per share.

The company scrip closed 0.80 per cent up at Rs 1,004.20 a piece on the BSE, as against gains of 0.58 per cent on the benchmark.

Brokerage IIFL Securities forecast TECHM to deliver USD revenue/EPS Cagr of 14%/15% over FY22ii-24ii. IIFL Securities fine tuned FY22ii-24ii EPS and maintain their 12mth TP of Rs2,000, pegged at 24x 2YF EPS.

Maintain BUY: IIFL Securities believe the broad-based growth over the last three quarters, combined with the strong order book and improving operational metrics, should lead to valuation discount narrowing for TECHM at 30% discount to peers. Hence, IIFL Securities Maintain BUY rating on the stock.

Tech Mahindra on Tuesday reported 4% increase in consolidated net profit at ₹1,368 crore for the quarter ended 31 December, 2022. The same was ₹1,309 crore in the last year period.

Revenue from operations came in at ₹11,451 crore for the third quarter under review, up 19% year-on-year.

On Tuesday, Tech Mahindra shares rose 2.37% to settle at ₹1,514 on NSE.

In constant currency terms, the revenue growth was 4.7% on a sequential basis, while the dollar revenues rose 17% year-on-year at $1533 million.

The IT company has reported an EBITDA (earnings before interest, tax, depreciation and amortisation) at ₹2,060 crore, up 3% quarter-on-quarter and 9% year-on-year.

ESG and Sustainability

Tech Mahindra has taken ambitious emission targets, approved by the SBTi (Science-based Targets Initiative) to reduce its absolute scopes 1 and 2 GHG (Greenhouse Gas) emissions 22% by 2030 and 50% by 2050 from baseline year 2016. The company has also taken a target to increase its renewable energy to 50% by 2025.

Tech Mahindra is also working closely with partners and customers to help them increase energy savings, digitize and automate operations and create collaborative work environments addressing the need for sustainable practices.