Tech Mahindra Q2 results: Net profit rises 153% to Rs 1,250 crore, revenue rises 3.5% YoY; declared dividend

IT services firm Tech Mahindra on Saturday reported a more than doubling of its consolidated net profit to $1,250 crore for the July-September quarter, driven by special proceeds from asset sales and growth in European and other non-US markets as well as the banking, financial services and insurance (BFSI) segment.

The Mahindra Group company made a net profit of $493.9 crore in the same period last year, according to an exchange document. Revenue increased by 3.49 percent $13,313.2 crore in Q2 2024-25 as compared to $12,863.9 crore in the same quarter of 2023-24.

“Other income includes the gain from the sale of property of $4,502 million comprising freehold land and its related buildings along with furniture and fixtures sold for a consideration of $5.35 billion, to be collected over a period of four years along with an interest of 8.2 percent per annum,” the company document says.

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

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

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

“This quarter we see consistent performance around increased closed deals, revenue growth, cost optimization and consistent free cash flow generation as we continue our journey towards the goals set for FY27. 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 $603 million in Q2FY25. Joshi further said that the company is on the right path for sustainable transformation in the long term, with its leading indicators moving in the right direction and its “Scaling at Speed” narrative resonating in the market.

“We have invested in strengthening capabilities in focus service lines by expanding leadership and investing in technical specializations. “We continue to invest in strengthening our fresher hiring program, developing the right mindset and skills and future associates, by creating AI capabilities. “Cloud first,” he told reporters.

Investments will continue to create and sustain a results-driven learning organization and cultivate a high-performance culture based on the pillars of simplify, clarify, innovate and drive a high-performance orientation, he added.

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

The Pune-based company reported revenue growth of 4.5% in its BFSI segment and 2.4% in its high-tech and media segment, with a 4.1% increase in Europe and market growth from the rest of the world 9.7%.

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

Joshi said these were the early stages of business recovery and they expect to “see some volatility in the telecom and BFSI portfolios” going forward.

The Pune-based company added 6,653 employees during the quarter under review, taking the total headcount to 1,54,273. Tech Mahindra shares settled at $1,688 each on the BSE on Friday, down 0.68 per cent from the previous close.