TCV Deal Wins
$359M
-27% QoQ
Total contract value for the quarter was $359 million, down from previous quarter, reflecting delayed client decisions.
TECHM
Information Technology
20 Jul 2023
Techm Ltd — Q1 FY24
Tech Mahindra reported a tough Q1 FY24 with revenue of INR 13,959 crore, down 4.1% QoQ, and PAT of INR 693 crore.
Financial stats pending filing verification
2-Minute Summary
✦ AI-Generated from Full Transcript
Tech Mahindra reported a tough Q1 FY24 with revenue of INR 13,959 crore, down 4.1% QoQ, and PAT of INR 693 crore. EBIT margin fell to 6.8%, impacted by a 2% one-time provision from a client bankruptcy and revenue decline. The CME vertical declined 9.4% QoQ due to project closures and discretionary spend cuts, while enterprise was nearly flat. Management described the quarter as a 'perfect storm' but expects gradual recovery from H2, driven by cost levers like subcon reduction (targeting <10% of revenue from 14%) and juniorization. New MD Mohit Joshi is in listening mode. Key risks include prolonged telecom weakness and delayed deal closures. The company remains confident in its long-term positioning despite near-term headwinds.
टेक महिंद्रा की पहली तिमाही (अप्रैल-जून 2023) मुश्किल रही। कंपनी की कमाई 13,959 करोड़ रुपये रही, जो पिछली तिमाही से 4.1% कम है। मुनाफा (PAT) 693 करोड़ रुपये रहा। कमाई पर मुनाफे का अनुपात (EBIT मार्जिन) घटकर 6.8% हो गया, क्योंकि एक ग्राहक के दिवालिया होने से 2% का एकमुश्त खर्च आया और कमाई भी गिरी। टेलीकॉम सेक्टर में 9.4% की गिरावट आई, जबकि दूसरे कारोबार लगभग स्थिर रहे। प्रबंधन ने इसे 'परफेक्ट स्टॉर्म' (एक साथ कई मुश्किलें) बताया, लेकिन उम्मीद है कि साल की दूसरी छमाही से धीरे-धीरे सुधार होगा। वे खर्च कम करने पर ध्यान देंगे, जैसे ठेके पर काम करने वालों की संख्या घटाना (अभी 14% से 10% से कम करना) और नए कर्मचारियों को ज्यादा काम देना। नए एमडी मोहित जोशी अभी समझ बना रहे हैं। मुख्य जोखिम टेलीकॉम कारोबार की कमजोरी और डील्स में देरी है। फिर भी कंपनी को लंबी अवधि में अपनी मजबूती पर भरोसा है।
Key Numbers
Subcontracting Cost as % of Revenue
14%
-200bps YoY
Subcon cost reduced from 16% to 14% of revenue over last 3-4 quarters, with target to reach below 10%.
IT Headcount Reduction
2,000
-2,000 QoQ
IT headcount reduced by approximately 2,000 in Q1, mainly in the latter half of the quarter.
DSO (Days Sales Outstanding)
98 days
+2 days QoQ
DSO increased to 98 days from 96 days in Q4, indicating slightly slower collections.
Management Guidance
Subcontracting cost target below 10% of revenue
Management aims to reduce subcontracting costs from current 14% to below 10% of revenue over the next few quarters.
Management guidance marginsH2 recovery expected with gradual improvement
Management expects first half to be tough but second half to see recovery, driven by deal closures and cost actions.
Management guidance growthOffshoring improvement of 3-4% headroom
Management sees potential to improve offshoring mix by 3-4% in the medium term, which would boost margins.
Management guidance marginsKey Risks
Prolonged telecom weakness
Telcos continue to tighten budgets on both CapEx and OpEx, with discretionary spend cuts and project delays persisting.
high · management_commentaryDelayed deal closures
Several large deals in CME vertical have been pushed out, impacting near-term revenue visibility.
high · analyst_questionMargin recovery dependent on growth
Some margin levers like juniorization require revenue growth to be effective; without growth, margin improvement may be limited.
medium · data_observationNotable Quotes
Tough times don't last, unprecedented times don't last, you know, challenges of global economy, challenges of communication media sector.
This quarter is a blip in our growth trajectory.
We know what we need to do. We just now have to get in to execute, and execute.
Frequently Asked Questions
What was Techm's revenue in Q1 FY24?
Techm reported revenue of ₹13,959 Cr in Q1 FY24, representing a — change compared to the same quarter last year.
What guidance did Techm management give for FY25?
Subcontracting cost target below 10% of revenue: Management aims to reduce subcontracting costs from current 14% to below 10% of revenue over the next few quarters. H2 recovery expected with gradual improvement: Management expects first half to be tough but second half to see recovery, driven by deal closures and cost actions. Offshoring improvement of 3-4% headroom: Management sees potential to improve offshoring mix by 3-4% in the medium term, which would boost margins.
What are the key risks for Techm in FY25?
Key risks include Prolonged telecom weakness — Telcos continue to tighten budgets on both CapEx and OpEx, with discretionary spend cuts and project delays persisting.; Delayed deal closures — Several large deals in CME vertical have been pushed out, impacting near-term revenue visibility.; Margin recovery dependent on growth — Some margin levers like juniorization require revenue growth to be effective; without growth, margin improvement may be limited..
Did Techm meet its previous quarter's guidance?
Scorecard data is being built as historical quarters are processed.
Where can I read the full Techm Q1 FY24 concall transcript?
The full earnings conference call transcript or source release is available on the linked source material. This page provides an AI-generated summary with filing verification status shown on the financial stats.