Tech Mahindra Q4 2023 results: Profit falls 26%, dividend at Rs 32 per share

Highlights

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• Tech Mahindra's Q4 FY23 net profit declined by 26%, attributed to challenging macro-economic conditions and lower margins

• However, revenue from operations increased by 13% YoY, driven by growth in digital and cloud businesses, with 28 new clients added

• The company declared a final dividend of Rs 32 per share and approved a buyback of Rs 12,000 crore

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Tech Mahindra, one of India's leading IT services companies, reported a 26% decline in its consolidated net profit for the fourth quarter of the financial year 2023, ending on March 31. The company posted a profit of Rs 1,118 crore, compared to Rs 1,505 crore in the same quarter last year. The company attributed the fall in profit to challenging macro-economic conditions and lower margins.

However, the company's revenue from operations rose by 13% year-on-year to Rs 13,718 crore, driven by strong growth in its digital and cloud businesses. The company also added 28 new clients in the quarter, taking its total active client base to 1,027. The company's earnings before interest and tax (EBIT) margin contracted by 260 basis points to 14.2%, due to higher subcontracting costs and wage hikes.

The company's total headcount decreased by 4,668 to 152,400 in the last quarter.

The company declared a final dividend of Rs 32 per equity share of Rs 5 each, which is 640% of the face value, for the financial year 2023. This is in addition to a special dividend of Rs 18 per share paid as interim dividend in November 2022. The total dividend for the financial year will be Rs 50 per share, which is 1,000% of the face value. The dividend will be paid by August 11, 2023, subject to the approval of shareholders at the annual general meeting.

The company's CEO and MD CP Gurnani said that the company delivered a resilient performance in FY23, despite the pandemic-induced disruptions and uncertainties. He said that the company's focus on customer-centricity, operational excellence and innovation helped it achieve a healthy growth across geographies and verticals. He also said that the company is well-positioned to leverage the opportunities in the post-pandemic digital era, with its strong capabilities and offerings.

The company's CFO Manoj Bhat said that the company's cash flow generation was robust in FY23, with a free cash flow conversion of over 100%. He said that the company's capital allocation policy reflects its confidence in its growth prospects and its commitment to enhance shareholder value. He also said that the company will continue to invest in strategic areas such as digital, cloud, cybersecurity and engineering services.

The company's board also approved a proposal to buy back of Rs 12,000 crore. The buyback is subject to regulatory approvals and other customary conditions. The company's shares closed at Rs 1003.15 on Thursday, down by 0.69% from the previous close.

Also read: Wipro Q4 2023 results