Tech Mahindra Limited — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

Lodha delivered robust Q2 performance with record presales and strong profitability across all operating markets. The company's expansion in Pune and Bangalore continues to scale rapidly, while the data center opportunity at Palava presents a significant new revenue stream. Strong balance sheet management and disciplined execution position the company well for sustained growth.

Highlights

  • Best ever Q2 presales of ₹4,570 crores, up 7% YoY, maintaining growth momentum

  • H1 sales at ₹9,000 crores, 43% of full-year guidance, on track for ₹21,000 crores target

  • Revenue growth of 45% YoY to ₹3,800 crores with strong margin expansion

  • EBITDA margin improved to 34.4% despite higher JDA contribution

  • Achieved full-year BD guidance of ₹25,000 crores in H1 itself

  • Palava data center opportunity scaled with ₹30 crores per acre land values

Key financials

2 periods

Headline

  • Revenue from Operations
    ₹3,800 Cr
    YoY +45%
  • Adjusted EBITDA
    ₹1,300 Cr
    YoY +37%
  • EBITDA Margin
    34.4%
    YoY -5.7%
  • PAT
    ₹800 Cr
    YoY +87%
  • Quarterly Presales
    ₹4,570 Cr
    YoY +7%
  • Operating Cash Flow
    ₹1,470 Cr
    YoY 0%
  • Net Debt
    ₹5,370 Cr
    YoY 0%

H1

  • Presales
    ₹9,000 Cr
    YoY 0%

What they filed

Q1 FY27: revenue up 17.7%, net profit up 31.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue13,313 13,286 13,384 13,351 13,995 +5%14,393 +8%15,076 +13%15,712 +18%
EBITDA1,750 1,809 1,839 1,935 2,165 +24%2,366 +31%2,565 +39%2,738 +41%
Net profit1,258 989 1,142 1,129 1,202 −4%1,119 +13%1,356 +19%1,486 +32%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Presales

  • Annual presales target Presales · FY26 · High confidence ₹21,000 crores
    keeps us on track to deliver our full year presales guidance of INR210 Billion

    — Abhishek Lodha

Pricing

  • Annual price growth Pricing · FY26 · High confidence 5-6%
    puts us on track to deliver about 5% to 6% price growth for the full year

    — Abhishek Lodha

Run Rate

  • Quarterly presales scaling Run Rate · Near term · Medium confidence High 50s to low 60s billion
    we are now expected to move up towards the run rate in the high 50s or low 60s

    — Abhishek Lodha

Business Development

  • Annual BD guidance outperformance Business Development · FY26 · High confidence Exceed ₹25,000 crores
    it is quite likely that we will outperform on our full year BD guidance

    — Abhishek Lodha

Data Center

  • Powered shell PAT potential Data Center · Long term · Low confidence ₹2,500 crores annualized for 250 MW
    if you were to just do 10%, i.e., 250 megawatts of IT capacity as powered shell, the annualized PAT from that could be INR2,500 crores

    — Abhishek Lodha

Risks & concerns

  • Data center business plan execution

    medium

    Still developing specific approach for powered shell development - BTS vs speculative

    Dedicated team working on comprehensive strategy

  • Higher JDA contribution affecting margins

    low

    JDA contributing just under 50% vs targeted 40%, but maintaining 32% embedded EBITDA margins

    Demonstrating resilience with strong margins

  • Market concentration risk in MMR

    low

    Non-Mumbai markets now contribute ~30% vs 3% at IPO, with NCR pilot starting

    Successfully diversifying with pune and bangalore scale-up

Q&A highlights

1 direct
Data Center Development Strategy Partial
we don't yet have a view on what would be the nature of doing the powered shell, would that only be on a BTS basis or would that be on a speculative basis

Management still developing comprehensive business plan for significant opportunity

Asked by Puneet (HSBC)

Data Center vs Residential Returns Direct
whatever comes from data center additionally over time, other than the land sales will be incremental

Data center opportunity is additive to existing residential growth plans

Asked by Puneet (HSBC)

1 min read 4 chapters

Detailed narrative

Record Performance and Market Expansion

Lodha achieved best-ever Q2 presales of ₹4,570 crores, demonstrating sustained momentum despite market challenges. The company's expansion beyond Mumbai continues to accelerate, with non-Mumbai markets now contributing ~30% of sales versus just 3% at IPO. Pune operations particularly impressive with ₹1,400 crores H1 sales, positioning as second-largest developer aiming for market leadership within 2 years.

Financial Performance and Balance Sheet Strength

Strong operational performance with 45% revenue growth and 87% PAT growth, despite higher JDA contribution. EBITDA margins remained robust at 34.4%, above embedded margin guidance. Net debt well-controlled at ₹5,370 crores (0.25x equity), with cost of debt improving by 30bps to 8%. Operating cash flow of ₹1,470 crores supports strong liquidity position.

Data Center Opportunity Development

Palava data center park emerging as significant value creator with 400 acres, 3 GW power capacity, and world-class infrastructure. Land values increased from ₹21 crores to ₹30 crores per acre with government policy support. AWS and STT as anchor tenants validate market demand. Management exploring powered shell opportunities with potential ₹2,500 crores annualized PAT from just 10% of capacity utilization.

Infrastructure and Connectivity Improvements

Major infrastructure milestones approaching with Palava-Airoli-Mulund freeway expected operational next quarter, bullet train connectivity by 2028-29 providing 10-minute access to BKC, and metro operationalization by 2028. These improvements support Palava's transition from lower mid-income to premium location, driving both volume and margin expansion.

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