Fifth largest software exporter Tech Mahindra on Tuesday reported a 90 per cent jump in post-tax profit for the three months to March at Rs897 crore on wider margins from an expanded revenue base, forex gains and lower tax payout.
While its total revenues grew to Rs6,883 crore from Rs6,116 crore a year ago, its pre-tax profit margin expanded to 17 per cent from 15.4 per cent, lifting the bottom-line for the reporting period.
For the full year ending March, the company’s net income rose 18.7 per cent to Rs3,118 crore, while revenue was up 17.1 per cent to Rs26,494 crore.
Chief financial officer Milind Kulkarni explained that the profit margins were pulled down by two acquisitions done in 2014-15, and the turnaround in the acquired companies has helped it post good numbers in the reporting period.
Citing Comviva, which it had acquired in 2012 for Rs260 crore and performed exceptionally good in the reporting period, chief executive and managing director CP Gurnani said Tech Mahindra has repeatedly shown its capacity to turn around businesses acquired at lower valuations.
The company is currently working to lift the performance of its US-based lighthouse Communications acquired in 2014 for $240 million and shed 20 per cent of the business which was not profitable enough, Gurnani said.
Gurunani said it will take another four quarters for the company to turnaround, while Kulkarni said TechM’s ultimate target is to take the profit margin from low-single digit to double-digits for this company.
This US company underwent an organisational restructuring exercise wherein Manish Vyas has been appointed as the chief executive of the business.