Tech Mahindra

Tech Mahindra hit a 61/2 year high post a set of very good numbers for Q2FY14. Its consolidated net profit QoQ, rose 5% at Rs. 718 crore on a 16% jump in revenue at Rs.4771 crore. EBIDTA was at Rs.1111 crore, up 28% and EBITDA margins came in very healthy at 23.3% v/s 21.05% and this was largely on account of rupee depreciation. The company also had a forex loss for the quarter at Rs.26 crore v/s a gain of Rs.134 crore in previous Q1.

The company’s dollar revenue was at US$758 million compared to US$ 724 million in Q1. It attrition rate rose marginally from 15% to 16% and IT utilization rate was also down from 76% to 75%. The good news here is that debt now at the end of Q2 stands at just Rs.335 crore and its cash balance has swollen to Rs.3273 crore and this could mean that the company has truly put its past behind and it could now start looking out for acquisitions. Q3 is seasonally, a weak quarter given the holiday season abroad and it hopes to maintain margins around same levels though going up from these levels could be difficult.