IT services firm Tech Mahindra on Thursday reported a 23 per cent jump in its consolidated net profit to Rs 851 crore for the June 2024 quarter.

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The Mahindra group company had posted a net profit of Rs 692.5 crore in the year-ago period.

The company, which began a three-year strategic restructuring under a new head recently, saw its revenues decline by 1.2 per cent to Rs 13,005 crore during the reporting quarter.

Its new managing director and chief executive Mohit Joshi said the performance in FY25 will be better than the year-ago period.

The overall costs were reduced by 2.3 per cent to Rs 955 crore, proving to be one of the major factors, along with a 40 per cent reduction in the interest expense at Rs 715 crore for the profit growth despite the revenue fall.

Joshi said it will be considering a wage hike for its over 1.47 lakh employees -- one of the major cost centres for any IT services firm -- only in the second half of the fiscal and the same has been communicated to the staff members.

The dip in the cost of services helped to widen the operating profit margin by 1.90 per cent to 12 per cent, and Joshi said the trajectory on this metric will be upwards from here.

Its chief financial officer Rohit Anand said the margin will be dragged down by 1.5 per cent due to elevated investments in areas like upskilling of staff members that it is undertaking from a future-proofing perspective.

The new deal wins came at USD 534 million, Joshi said, adding that while the overall IT sector continues to face the same uncertainties, the recast being carried at the company is helping it.

He said unlike its peers, it does not include repeat business in the new deal win number, which may make it look lower than its counterparts. Additionally, it is also selective in choosing deals, especially the large ticket ones, he said.

During the reporting quarter, revenue from its flagship communications vertical grew by 10 per cent bringing down the share of the sector in the pie to 33 per cent, while manufacturing grew the fastest.

Joshi attributed the challenges in the communications vertical to the overall headwinds faced by the telecom sector globally because of lower revenues.

In the banking, financial services and insurance vertical, which contributes nearly 15 per cent to the pie, the company expects some volatility going ahead, but is sanguine about growth in the North American geography on the business from manufacturing and high-technology.

The total number of staffers grew by 2,165 during the quarter, which was attributed to the fresher hiring and additional manpower in the business process outsourcing vertical, Anand said.
The Tech M scrip closed 0.28 per cent up at Rs 1,530.10 apiece on the BSE against a 0.14 per cent correction on the benchmark.