Tech Mahindra reported stronger-than-expected revenue for the 1st quarter ended June 30, supported by robust growth in its manufacturing business and the depreciation of the Indian rupee against the US dollar.
The company’s revenue increased 17.7% year-on-year to Rs. 157.12 billion ($1.63 billion), surpassing analysts’ expectation of Rs. 154.76 billion. However, net profit rose 28.5% year-on-year to Rs. 14.65 billion, falling short of the estimated Rs. 15.63 billion.
The weaker rupee also contributed to revenue growth. Over the past 12 months, the Indian currency depreciated by around 9% against the US dollar. Since Indian IT companies earn a significant share of their revenue in foreign currencies while most of their expenses are in rupees, the currency movement provided additional support to the company’s topline.
Among its business segments, the communications division, which contributes around 1/3 of Tech Mahindra’s total revenue, recorded 1.3% year-on-year growth. The manufacturing business, the company’s 2nd largest segment, delivered a stronger performance with 17.2% year-on-year growth.
Tech Mahindra also reported a significant increase in net new order bookings, which rose to $1.08 billion from $809 million in the same quarter last year. During the quarter, the company announced new partnerships with Telefónica Germany, Microsoft, and robotics platform Viam.
The results follow strong quarterly performances by larger Indian IT companies, including Tata Consultancy Services (TCS) and HCLTech, which also reported better-than-expected results, supported by healthy technology spending from financial services clients.
Ahead of the quarterly results announcement, Tech Mahindra’s shares closed 1.13% higher.
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