Tech Mahindra (TECHM) Q4 18/19 earnings summary

Executive summary

• FY19 revenue grew 12.9% to INR 347,421 Mn; PAT attributable to owners rose 13.1% to INR 42,976 Mn, with EBITDA margin up 290 bps YoY to 18.2%.

• Digital revenue grew over 41% annually; Manufacturing exceeded USD 1 Bn in revenue, while Communications returned to growth with 3.8% CQGR from Q1 to Q4 FY19.

• Record free cash flow of INR 3,708 crore and the first share buyback marked FY19 capital allocation; the buyback was completed in April 2019.

Financial highlights

• Consolidated revenue was INR 347,421 Mn, up 12.9% YoY; USD revenue was USD 4,970.5 Mn, up 4.2% reported and 5.8% in constant currency.

• Consolidated EBITDA was INR 63,369 Mn versus INR 47,096 Mn; EBITDA margin was 18.2% versus 15.3%.

• PAT attributable to owners reached INR 42,976 Mn versus INR 37,998 Mn; consolidated diluted EPS was INR 47.72 versus INR 42.66.

• Standalone revenue from operations rose to INR 272,196 Mn from INR 236,922 Mn; standalone PAT was INR 43,804 Mn versus INR 39,939 Mn.

• Consolidated operating cash flow was INR 44,320 Mn versus INR 35,535 Mn; investing outflow narrowed to INR 21,164 Mn from INR 33,597 Mn.

Outlook and guidance

• FY20 commentary emphasized opportunities from digital transformation and disruptions ahead; no quantified FY20 revenue or margin target was set in the cited outlook.

• Investments in 5G capabilities, partnerships and labs, alongside AI, automation, cloud and cybersecurity, were positioned to support future growth.

• Remaining consolidated performance obligations were INR 197,324 Mn at March 31, 2019; ~60% was expected to convert to revenue within one year, subject to contract changes and other estimates.