Tech Mahindra Q3FY23 net profits down 5.3 percent at Rs 1,297 crore

The IT services flagship of the Anand Mahindra group, Tech Mahindra, released its third quarter earnings for Q3FY23, with the numbers slightly below the street expectations. Net profits for Q3FY23 fell 5.3% to Rs1,297 crores yoy while the sequential profits were up 0.9%. Profit pressures were triggered by supply chain constraints and pricing pressures amid recession concerns.

Top line revenues were up 19.9% yoy at Rs13,735 crores, while on a sequential basis the revenues were higher by 4.6%. For the quarter, the total contract value (TCV) of deals signed came in at an impressive $795 million. This is 11% higher on a yoy basis. The enterprise business of Tech Mahindra scaled the $1 billion revenue mark during the quarter ended December 2022.

CP Gurnani, the CEO and Managing Director of Tech Mahindra, has underlined in his post results analysis that these were modestly good results in the light of the macroeconomic challenges in the quarter. While growth had moderated to a great extent, Tech Mahindra has continued to consolidate its position in its core verticals like telecom and manufacturing. However, the US revenues were lower by 0.4% on a sequential basis on account of pressure on verticals like banking, insurance and manufacturing etc. 

In contrast to the US region, it was the European region that witnessed 1.6% sequential growth in the top line in constant currency terms. However, according to Tech Mahindra’s own admission, the UK and EU are the most vulnerable to an economic slowdown in this year. This is not only expected to hit the volumes of business coming from these regions, but also likely to lead to pricing pressures as companies cut tech spending and bargain harder on routine price revisions.