Tech Mahindra Key Ratios

The decline in ROE from 22.13% in 2022 to 8.89% in 2024 is predominantly driven by a significant decrease in PAT margin, which fell from 12.47% to 4.53%, indicating reduced profitability.Asset turnover remained relatively stable, suggesting that the efficiency in asset usage did not significantly change, contributing less to the ROE fluctuation.Leverage showed slight variations, yet it indicates that equity returns are more affected by reducing profitability rather than changes in asset efficiency or debt levels.

Inventory days showed a consistent decrease from 0.29 to 0.21, indicating improved inventory management and quicker turnover, which is beneficial for cash flow.Receivable days remain high and stable, fluctuating around 85 days, implying challenges in collecting payments, which might impact liquidity and operational efficiency.The Cash Conversion Cycle increased slightly from 80.36 to 85.44 days, representing a deteriorated efficiency in the working capital cycle, hinting at potential cash flow pressures.

ROE has decreased sharply from 22.13% in 2022 to 8.89% in 2024, primarily due to a decline in profitability rather than a significant increase in debt or a decrease in asset efficiency.ROCE followed a similar pattern, indicating that the efficiency of capital, including debt, also weakened, falling to 12.02%, showing a struggle to generate returns on both equity and borrowed funds.ROA declined from 13.60% to 5.52%, suggesting that overall asset utilization efficiency has diminished, which may raise concerns for investors about the ability to leverage assets for profit generation.