Margin expansion continues to surprise
Q2FY09 Result Highlights
Tech Mahindra reported revenues of US$ 270mn flat QoQ, Rs 11.6 bn (+4.3% QoQ,
29.8% YoY), slightly below expectations. However for a 2nd quarter in a row operating
margins expansion surprised positively by ~230 bps to 28% (V/s our expectations
of ~190 bps decline as we had built in transition costs related to new deals) helped by
gross margin expansion of ~210 bps and tight control on SGA costs (SGA expenses
down by 12 bps QoQ). Net profits at Rs 2355 mn (-9% QoQ, +29.5% YoY) came in
lower than estimates driven by high forex losses at Rs 320 mn during the quarter. Net
hiring during the quarter was below par at 766. Revenues from top client ex BTGS deal
declined by ~11.2% sequentially on reported numbers (we estimate that top client
revenues adjusted for US$/GBP movement declined by ~2% sequentially V/s
management comments of revenues being flat at constant currency, for working
see section below).

Download Tech+Mahindra+Q2FY09+Result+Update - Get more Business Documents

Tech+Mahindra+Q2FY09+Result+Update - Get more Business Documents