Tech Mahindra (TECHM) Q4 10/11 earnings summary

Executive summary

• FY11 revenue exceeded $1bn; consolidated revenue rose 11.1% YoY to Rs 51,402m, while PAT before exceptional items and minority interest increased to Rs 7,458m from Rs 7,117m.

• Recovery in client spending, new operator wins and broader service offerings supported growth; margins faced pressure from higher operating costs and rupee appreciation.

• Workforce reached 38,333, up 14.3% YoY; active client relationships increased to 128 from 113.

Financial highlights

• Consolidated total income rose 12% YoY to Rs 52,577m from Rs 47,008m; revenue increased 11.1% to Rs 51,402m.

• Consolidated EBITDA was Rs 10,033m versus Rs 11,326m; PBIT was Rs 8,774m versus Rs 10,741m.

• Consolidated PAT before exceptional items and minority interest reached Rs 7,458m versus Rs 7,117m; standalone PAT before exceptional items was Rs 6,967m versus Rs 7,513m.

• Standalone revenue from services grew 10.7% YoY to Rs 49,655m; total income was Rs 50,807m versus Rs 45,747m.

Outlook and guidance

• Gartner forecast 2011 global IT services growth of 4.6% and telecom services growth of 3.4%; cautious optimism reflected clients’ focus on growth initiatives.

• Next-generation network migration, emerging-market telecom expansion, cloud adoption and broader outsourcing were identified as demand opportunities.

• New cloud and mobility capabilities, plus a six-pillar services strategy, were positioned to address evolving client needs and support growth.