{"id":155387,"date":"2023-10-27T06:50:21","date_gmt":"2023-10-27T10:50:21","guid":{"rendered":"https:\/\/44.250.171.167\/?p=155387"},"modified":"2023-10-27T06:50:22","modified_gmt":"2023-10-27T10:50:22","slug":"tech-mahindra-limited-q2-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/tech-mahindra-limited-q2-fy24-earnings-conference-call-insights\/","title":{"rendered":"Tech Mahindra Limited Q2 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Tech Mahindra Limited (TECHM) Q2 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Revenue declined 2.4% in constant currency vs. last quarter due to market pressures and rationalization of non-core businesses.<\/li>\n<li>EBIT margin dropped 200 bps to 4.7% due to revenue decline and one-time costs related to rationalization.<\/li>\n<li>Operating margin declined from 8.6% last quarter to 7.3% after adjusting for exceptional items.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Large Deal Momentum and Market Headwinds<\/strong>\n<ul>\n<li>$640 million in large deal TCV wins, higher than last quarter.<\/li>\n<li>Pipeline for second half looks healthy but deal closure cycles remain elongated.<\/li>\n<li>Discretionary spending cuts by customers, especially in core verticals like communications, amid high interest rates.<\/li>\n<li>Working on business reset and refresh to adapt to market dynamics.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Reorganization and Strategic Plans<\/strong>\n<ul>\n<li>Undergoing a major reorganization to drive greater customer focus and improve business economics.<\/li>\n<li>Reorganization aims to improve customer intimacy, focus on key accounts and large deals, and add domain expertise.<\/li>\n<li>The company will continue to leverage strengths in telecom and manufacturing verticals.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Impact of Business Rationalization<\/strong>\n<ul>\n<li>TECHM has taken steps to rationalize underperforming business areas.<\/li>\n<li>Additional rationalization actions were taken in 2Q and will continue in Q3.<\/li>\n<li>Aims to improve risk management, margins, cash flows and sharpen strategic focus.<\/li>\n<li>Full benefits expected in FY25; Q4 FY24 could be start of clean slate performance.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Medium-term Growth and Margin Aspirations<\/strong>\n<ul>\n<li>Priorities appear to be improving margins while accelerating revenue growth.<\/li>\n<li>Leveraging automation, subcontractors and acquisitions to reshape cost structure.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Strengthening Non-telecom Capabilities<\/strong>\n<ul>\n<li>Telecom is cyclical and over 40% of revenues currently.<\/li>\n<li>Expanding offerings like network services to other sectors.<\/li>\n<li>Building capabilities in manufacturing, BFSI, healthcare and more.<\/li>\n<li>Aim is to diversify revenues across sectors while retaining telecom strength.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Employee Cost Trends<\/strong>\n<ul>\n<li>Employee costs up 3.5% CQGR last 4 quarters despite lower headcount due to wage hikes in Q1 and Q2 this year versus Q2 and Q3 last year.<\/li>\n<li>Also hiring freshers as long-term strategy for pyramid correction.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Outlook for Telecom Vertical<\/strong>\n<ul>\n<li>Global telecom growth muted, no major pickup expected in H2.<\/li>\n<li>Focus is on optimizing delivery while retaining domain expertise.<\/li>\n<li>Well positioned to grow when telecom spending rebounds.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Levers Going Forward<\/strong>\n<ul>\n<li>Pyramid structure, resource costs, service line mix.<\/li>\n<li>Productivity improvements, automation in fixed price projects.<\/li>\n<li>Headcount ratio optimization, subcontractor mix.<\/li>\n<li>Limited opportunity from SG&amp;A optimization.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Top Accounts Revenue Concentration<\/strong>\n<ul>\n<li>Revenue from top 5 clients down 30% in last 6 quarters due to planned rationalization in some accounts.<\/li>\n<li>Communications vertical issues in some key accounts.<\/li>\n<li>Overall aligned with lower discretionary spending.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Business Challenges in Finance &amp; Manufacturing<\/strong>\n<ul>\n<li>TECHM sees big opportunities in manufacturing due to digital transformation and the company&#8217;s heritage via the Mahindra Group.<\/li>\n<li>Aims to build on insurance strengths in BFSI while acknowledging there is more work to do in banking.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Improvement Plans<\/strong>\n<ul>\n<li>Margins were impacted in Q1 and Q2 by one-time expenses from closing unprofitable contracts and businesses.<\/li>\n<li>Adjusting for these expenses, core margins were down 400 bps due to revenue pressure and wage increases.<\/li>\n<li>The company aims to align costs with slower revenue growth in the near term.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Tech Mahindra Limited (TECHM) Q2 FY24 Earnings Concall Financial Performance Revenue declined 2.4% in constant currency vs. last quarter due to market pressures and rationalization of non-core businesses. EBIT margin dropped 200 bps to 4.7% due to revenue decline and one-time costs related to rationalization. Operating margin declined from 8.6% last quarter [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,8],"tags":[10169,5075,9124],"class_list":["post-155387","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-technology-stocks","tag-earnings","tag-it-services","tag-software-technology-services"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":155151,"url":"https:\/\/alphastreet.com\/india\/laurus-labs-limited-q2-fy24-earnings-conference-call-insights\/","url_meta":{"origin":155387,"position":0},"title":"Laurus Labs Limited Q2 FY24 Earnings Conference Call Insights","author":"Praveen","date":"October 20, 2023","format":false,"excerpt":"Key highlights from Laurus Labs Limited (LAURUSLABS) Q2 FY24 Earnings Concall Q2 FY24 Results Revenue declined 22% year-on-year to INR1,224 crores.. 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Presenting below are its Q2 FY26 earnings results. \u00a0 Q2 FY26 Earnings Results Revenue\u2026","rel":"","context":"In &quot;AlphaGraphs&quot;","block_context":{"text":"AlphaGraphs","link":"https:\/\/alphastreet.com\/india\/category\/infographics\/"},"img":{"alt_text":"Tech Mahindra Q2 FY26 Earnings Results","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/10\/Tech-Mahindra-Q2-FY26-Earnings-Results.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/10\/Tech-Mahindra-Q2-FY26-Earnings-Results.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/10\/Tech-Mahindra-Q2-FY26-Earnings-Results.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/10\/Tech-Mahindra-Q2-FY26-Earnings-Results.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/10\/Tech-Mahindra-Q2-FY26-Earnings-Results.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/10\/Tech-Mahindra-Q2-FY26-Earnings-Results.png?resize=1400%2C800&ssl=1 4x"},"classes":[]}],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts\/155387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/users\/1767"}],"replies":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/comments?post=155387"}],"version-history":[{"count":0,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts\/155387\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/media\/154818"}],"wp:attachment":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/media?parent=155387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/categories?post=155387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/tags?post=155387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}