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    Tech Mahindra

    TECHMNeutral
    Information Technology·14 Oct 2025
    Management Summary

    Tech Mahindra demonstrated strong execution at the midpoint of its three-year transformation strategy, delivering the strongest quarterly constant currency growth in 10 quarters while expanding margins for the eighth consecutive quarter. The company showcased significant progress in AI capabilities through TechM Orion platform and secured recognition as a leader in Gartner's Gen AI consulting quadrant. With broad-based growth across key verticals and strong deal momentum, TechM is well-positioned for the second half of its transformation journey.

    Highlights

    7
    • Revenue of US$1,586 million with strongest constant currency growth (1.6% QoQ) in 10 quarters

    • EBIT margin expanded 108 bps to 12.1%, marking 8th consecutive quarter of margin expansion

    • Deal wins of US$816 million representing 57% growth on LTM basis across multiple verticals

    • Strong broad-based growth in Manufacturing (5.2%), BFSI (6.2%), and Retail/Transport/Logistics (7.2%)

    • Launched TechM Orion agentic AI platform with 300+ agents for complex business problems

    • Added 21 new must-have accounts in H1 FY26, with 17 already generating $1M+ revenue each

    • Selected as key player in India AI mission to develop sovereign LLM with 1 trillion parameters

    What Changed2

    vs Q2 FY26

    Tone shiftConfident and strategic with strong execution focus on diversification → confident and strategicGuidance items5 → 2 (-3)

    Key financials

    Single quarter

    07 metrics
    1. 01Revenue1,586 Mn-0.2%YoY
    2. 02Revenue (INR)₹13,995 Cr+5.1%YoY
    3. 03Operating Margin12.1%+108%YoY
    4. 04PAT135 Mn+28.2%YoY
    5. 05PAT Margin8.5%0%YoY

    Guidance & targets

    2
    CategoryTargetPriority
    Profitability
    EBIT Margin
    15%
    High
    Growth
    Revenue Growth vs Peers
    Above peer average
    Medium

    Risks & concerns

    3
    RiskSeverity

    Slow macroeconomic environment and muted growth expectations

    Management indicated they don't see dramatic growth coming back next year due to slow macro environment, though transformation strategy remains on trackOther acknowledged

    medium

    Communications vertical decline amid industry challenges

    Communications declined 2.2% YoY, though largest client has stabilized spend and delivered growth above company averageOther acknowledged

    low

    Automotive sector headwinds in Commercial segment

    Automotive broadly stable but Commercial segment continues facing headwinds while Passenger Vehicle shows early stabilization signsOther acknowledged

    low

    Q&A highlights

    3

    “While we will wait for another quarter or two to see how it goes, we really don't see dramatic growth coming back next year... we will always calibrate between the investments needed in the business and the margins that are due back to the investors”

    Management provided insight on balancing margin targets with necessary business investments in slow macro environment

    asked by Sudheer Guntupalli - Kotak

    1 min read4 chapters

    Detailed Narrative

    01

    Transformation Progress at Mid-Point

    Tech Mahindra reached the halfway point of its three-year transformation strategy with strong evidence of progress. The company delivered its strongest quarterly constant currency growth in 10 quarters (1.6% QoQ) while achieving the 8th consecutive quarter of margin expansion to 12.1% EBIT margin. Management highlighted underlying advantages being better leveraged including experienced workforce, strong client relationships, and vertical expertise.

    02

    AI Leadership and Platform Development

    The company made significant AI advancements with the launch of TechM Orion agentic AI platform featuring 300+ agents for complex IT and business problems. Tech Mahindra was recognized as a leader in Gartner's Gen AI Consulting quadrant and selected as a key player in India's AI mission to develop a sovereign LLM with 1 trillion parameters. Management indicated plans to unveil a new commercial model for AI plus services delivery.

    03

    Broad-based Revenue Growth and Client Expansion

    The quarter demonstrated broad-based growth with Manufacturing (5.2%), BFSI (6.2%), and Retail/Transport/Logistics (7.2%) all showing strong performance. The company added 21 new must-have accounts in H1 FY26, with 17 already generating over $1 million in revenue each. The $20+ million client bucket continued outpacing company average growth, contributing over $1 billion this quarter.

    04

    Strong Deal Momentum and Market Position

    Deal wins reached $816 million, representing 57% growth on LTM basis across multiple verticals including strategic partnerships with major telecom operators, logistics leaders, and semiconductor manufacturers. The company's focus on partnership-oriented client relationships and advanced solution offerings with vertical-specific tailoring is showing positive results in competitive positioning.

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