has forecast double-digit growth for the ongoing fiscal year, in line with bigger peers Tata Consultancy Services, Infosys and HCL Technologies, on “strong” demand from clients.
Indian IT services providers have seen significant order wins, as customers digitise their businesses.
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Infosys has forecast 12-14% growth for the current financial year, while Wipro expects 2-4% growth in revenue in the quarter to June. HCL Technologies and TCS have said they expect double-digit growth in fiscal year 2022.
“Our continued focus on cutting-edge technologies has expanded client engagement with large deal wins this quarter. We are witnessing a strong demand acceleration and are committed towards delivering a next-level human-centred experience of the future, now,” said CP Gurnani, managing director and CEO, Tech Mahindra.
Business is expected to grow in the double digits as the company has moved from a ‘repair’ to a ‘growth’ phase, he said.
“The health and wellness of our associates and community at large continue to be our prime focus as we navigate through this pandemic together,” Gurnani said.
Tech Mahindra’s fourth quarter profits jumped 34.6% to Rs 1,081 crore, while revenues rose 2.5% to Rs 9,730 crore, but below analysts’ expectations.
Sector trackers are, however, bullish about the company’s growth prospects as well as its deal pipeline.
“We believe TechM deserves multiple re-rating, considering industry-leading EPS CAGR over FY22-23E, driven by sharp rebound in EBIT margin and strong double-digit topline growth owing to uptick in global 5G rollout and higher demand for enterprise technology,” said Suyog Kulkarni, senior research analyst at Reliance Securities, in a note after the results, which were released after market hours Monday.
Tech Mahindra’s board has recommended a final dividend of Rs 15 per share and a special dividend of Rs 15, taking its total dividend payout for FY21 to Rs 45 per share, its highest ever.
The company reported free cash flow of $965 million at the end of March.
For the previous fiscal year ended March 31, Tech Mahindra reported profit after tax of Rs 4,428 crore, up 9.8% year on year, and revenues of Rs 37,855 crore, up 2.7%.
The company reported net new deal wins worth $2.5 billion for the year.
Gurnani said the deal momentum was expected to continue into the first quarter.
Its total headcount at the end of the year was 121, 054.
The company will roll out salary increases in April, said chief financial officer Milind Kulkarni.
“We have witnessed substantial margin improvement and cash flow generation this year,” Kulkarni said.
Tech Mahindra’s focus on delivery transformation is expected to continue, as it increasingly witnesses a structural shift towards digital to adapt to the new normal.
“We are positioned uniquely to gain from this shift, while improving our financial and operating metrics going forward,” he added.
The company also announced the acquisition of US-based consulting and technology service company Eventus Solutions for up to $44 million.
The acquisition is expected to boost its capabilities in the customer experience and customer management space, help build an industry leading consulting practice and move up the value chain in the business process services business.
Tech Mahindra’s stock closed 1.3% higher on the BSE Monday.
