Tech Mahindra (TECHM) Q4 16/17 earnings summary

Executive summary

• FY17 revenue reached ₹291,408m, up 10% YoY in rupee terms and 7.8% in USD; enterprise business growth outpaced the industry for a second consecutive year.

• Margin performance weakened amid business restructuring and managed-services spending realignment; improving margins was identified as a key priority for the next fiscal year.

• Strategy shifted toward digital transformation through the Run, Change and Grow framework, with investment in automation, AI, blockchain, IoT, design and other digital capabilities.

Financial highlights

• Consolidated revenue was ₹291,408m versus ₹264,942m in FY16; consolidated total income was ₹299,184m versus ₹269,336m.

• Consolidated EBITDA was ₹41,844m versus ₹42,706m; EBITDA margin was 14.4% versus 16.1%.

• Consolidated profit after tax was ₹28,509m versus ₹30,266m; ₹28,129m was attributable to owners versus ₹29,929m.

• Standalone revenue from services rose 10.5% to ₹231,654m; standalone PAT was ₹30,473m versus ₹31,728m.

• Consolidated operating cash flow was ₹40,714m versus ₹31,370m; investing cash outflow was ₹30,508m versus ₹14,598m.

Outlook and guidance

• FY18 was positioned as a year of re-aligning and recalibrating business focus across technologies, domains and locations, with margin improvement a primary focus.

• Digital demand areas included AI, blockchain, IoT, cloud, security, automation and software-defined networks; RCG offerings aimed to help customers run better, change faster and grow greater.

• Gartner forecast worldwide IT spending growth of 1.4% in CY17 and 2.9% in CY18, with IT services spending projected to grow 2.3% in CY17.