Tech Mahindra's Quarterly Results: Employee Turnover at 11.8%, Workforce Increment by 3,276 in Fiscal Year 25
Breaking News 📰 Tech Mahindra's profit skyrocketed by a staggering 76.51% to Rs 1166.70 crore during the last quarter of FY25. The board of directors suggested a final dividend of Rs 30 per equity share (a 600% increase) for the entire financial year that ended on March 31st. The total workforce stood at 148,731 - a drop of 1,757 from the previous quarter and an increase of 3,276 from the previous year.
According to a regulatory filing, the workforce composition in Q4 FY25 was as follows: 80,609 software professionals, 59,636 business process services (BPS) professionals, and 8,486 sales and support employees. The IT attrition rate for the last twelve months stands at 11.8%.
The IT services giant reported a smaller-than-expected fourth-quarter revenue due to ongoing struggles in its communications and high-tech verticals. Tech Mahindra has been feeling the heat due to its reliance on the communications vertical, which accounts for over a third of its revenue and is subjected to macroeconomic conditions, as it undergoes a turnaround under CEO Mohit Joshi. The vertical saw a 2.2% decline year-on-year during the quarter, and Joshi blamed the dip on the adverse effects of prolonged industry headwinds.
Big Winners
- Cost Management: Achieved a 60% year-over-year (YoY) increase in operating profit due to "executional excellence, operational leverage, and cost optimization," as asserted by the CTO.
- Margin Expansion: Earnings before interest and taxes (EBIT) margins increased by 320 basis points YoY in Q4 (10.5%) and 360 basis points annually, demonstrating enhanced operational efficiency. Full-year profit after tax (PAT) surged 80% YoY to ₹4,252 crore.
- Deal Momentum: Annual deal wins rose 42% YoY to $2.7 billion in FY25, with quarterly total contract value (TCV) at $798 million, showcasing robust customer engagement.
Workforce Dynamics
- Attrition Rate: Stabilized at 11.8% (LTM).
- Headcount Reduction: Shed 1,757 employees from the previous quarter, likely in line with cost-saving measures.
Revenue Performance
- FY25 Growth: Total revenue increased by 2% YoY to ₹54,988 crore, with constant currency growth at a mere 0.2% YoY.
- Q4 Challenges: Quarterly revenue remained stagnant in USD terms ($1.55 billion) and grew 4% YoY in INR (₹13,384 crore), affected by the soft industry demand.
Shareholder Returns
- Dividend Increase: Board recommended a final dividend of ₹30 per share, marking a 12.5% increase from the previous year.
- Capital Allocation: 85% of FY25's free cash flow ($150 million in Q4) was directed towards returning to shareholders, highlighting the company's shareholder-friendly policies.
- Tech Mahindra's profit grew significantly in the last quarter of FY25, reaching Rs 1166.70 crore, which is a 76.51% increase.
- The board of directors proposed a final dividend of Rs 30 per equity share for FY25, marking a 600% increase from the previous year.
- Despite the profit growth, Tech Mahindra reported a smaller-than-expected fourth-quarter revenue due to challenges in its communications and high-tech verticals.
- The IT attrition rate for the last twelve months stands at 11.8%, as indicated in a regulatory filing.
- In terms of capital allocation, 85% of FY25's free cash flow was directed towards returning to shareholders, reflecting the company's shareholder-friendly policies.
- The total workforce stood at 148,731 at the end of Q4 FY25, with a headcount increase of 3,276 compared to the previous year. However, there was a reduction of 1,757 employees from the previous quarter, likely as a part of cost-saving measures.
