Tech Mahindra, the IT services provider, has reported a substantial drop in its net profit for the second quarter, which missed profit projections primarily due to clients curtailing expenditures in the face of a challenging macroeconomic climate.
In Q2FY24, the company's net profit experienced a significant decline of 61.6 percent, dwindling from Rs 1,285 crore in the preceding year to Rs 494 crore. This sharp decrease in profit represents the most substantial decline the company has faced in over 16 years.
The consolidated revenue from operations also witnessed a decrease of 2.02 percent, settling at Rs 12,864 crore when compared to the previous year's performance.
Simultaneously, Tech Mahindra's board approved an interim dividend of Rs 12 per equity share, setting November 2 as the record date for this dividend distribution.
This reduction in profits during the second quarter is consistent with the broader slowdown observed in the Indian IT industry. The sector has been grappling with diminished technology spending, particularly from US and European businesses, amid concerns about an economic deceleration in an environment of global uncertainty. As a result, most Indian IT firms have made adjustments by scaling back investments and deferring deal closures.
It is noteworthy that other prominent IT service providers, such as Tata Consultancy Services and Infosys, have similarly reported revenues below expectations. In fact, Infosys and HCL Technologies had already lowered their annual revenue forecasts earlier in the same month.
Moreover, Tech Mahindra's new deal wins declined as well, decreasing from $716 million in the preceding year to $640 million in the present period.
Reflecting this financial performance, the shares of Tech Mahindra concluded the trading day with a 1.39 percent decrease, reaching a value of Rs 1,139.90.
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