Tech Mahindra (TECHM) Q4 09/10 earnings summary

Executive summary

• FY10 total income rose 6% standalone to Rs 45,747m; consolidated revenue increased 3.6% to Rs 46,254m amid recession and currency volatility.

• Strategy broadened beyond telecom applications into six areas: network technology, BPO, infrastructure management, security and value-added services; BPO grew significantly.

• The 42.67% Satyam stake expanded access to new industries and services, but acquisition financing sharply raised interest costs and Satyam’s results were not included in consolidation.

Financial highlights

• Consolidated revenue was Rs 46,254m vs Rs 44,647m; total income Rs 47,008m vs Rs 44,269m, FY10 vs FY09.

• Consolidated net profit after minority interest was Rs 7,005m vs Rs 10,145m; diluted EPS after exceptional items was Rs 53.72 vs Rs 78.82.

• Standalone PAT was Rs 7,428m after an Rs 85m exceptional item, vs Rs 9,866m; excluding the exceptional item, PAT was Rs 7,513m vs Rs 9,866m.

• Consolidated EBITDA was Rs 11,325m vs Rs 12,824m; EBITDA margin was 24.5% vs 28.7%.

• Operating cash flow rose to Rs 14,503m from Rs 12,225m; investing outflow was Rs 29,925m, largely reflecting Satyam investment.

Outlook and guidance

• Growth opportunities cited in emerging markets, next-generation network transformation, and expanded IT, BPO and network outsourcing by telecom operators.

• Strategy targets six customer-spend areas; service expansion includes network technology, BPO, infrastructure management, security and value-added services.

• Greenfield mobile operator launches gained traction across Africa, the Middle East, India and Asia Pacific; BPO added more than 4,000 associates during the year.