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Mint
18-07-2025
- Business
- Mint
Tech Mahindra Q1: Profit jumps, revenue stalls. What's next for investors?
Tech Mahindra is a leading Indian multinational information technology services and consulting company. It is part of the Mahindra Group. The company operates worldwide, with a presence in over 90 countries and 148,517 employees. It serves clients in various sectors including banking, telecommunications, healthcare, manufacturing, retail, media and public services. In recent years, Tech Mahindra has expanded through strategic acquisitions and enhanced its focus on emerging technologies such as artificial intelligence, internet of things, and blockchain. Tech Mahindra announced its results for the first quarter of FY26 after hours on 16 July. The stock was down slightly the next day. Revenue flat, profit surges Tech Mahindra reported Q1 2026 revenue that was slightly behind estimates, beat on net profit. Let's take a look at what the company achieved in dollar terms. Revenue came in at $1.56 billion, up about 0.4% year-on-year. Earnings before interest and taxes (Ebit) increased 30.2% year-on-year to $172 million. Net profit kept pace with Ebita, also increasing 30.2% year-on-year to $133 million. Free cash flow came in at $86 million. Tech Mahindra's total expenditure fell during the quarter, boosting the bottom line. Revenue from the Americas, which account for the bulk of revenues, fell 5.9% compared to last year. The manufacturing and healthcare & lifesciences verticals shrunk, while BFSI, retail, and logistics & transport grew. New deal wins surged to $809 million from $534 million in the same quarter last year. What did management say? Mohit Joshi, CEO and managing director, said: "Our performance is steadily strengthening, reflecting disciplined execution and a focused strategy. Deal wins have increased by 44% on a last twelve months (LTM) basis, supported by broad-based momentum across verticals and geographies." Rohit Anand, chief financial officer, said, 'We have delivered seven consecutive quarters of margin expansion - a clear reflection of the discipline and focus across our organisation. Even in an uncertain environment, our Project Fortius program continues to generate meaningful results and drive operational improvements." AI-related services to lead revenue growth Tech Mahindra has forged key partnerships and is focussing on AI, which should drive growth going forward. It announced a partnership with Nuix, a global leader in AI-powered investigative analytics and intelligence software to provide innovative, scalable solutions for cyber and fraud detection. The partnership will leverage TechM's extensive expertise in AI, digital engineering and cyber risk management to integrate Nuix's advanced investigative and data analytics solutions into its services, unlocking significant global sales opportunities with the Nuix Neo Solutions. Tech Mahindra and KOGO AI, a category-defining provider of agentic AI infrastructure, announced a strategic collaboration to jointly build and deliver next-gen enterprise AI solutions and agents designed for autonomy, scale and compliance. Did the results disappoint? There were no major disappointments, but the 1% decline in constant-currency revenue was a negative. Weakness in the Americas and in key verticals were other areas of concern. Strong profit growth, deal wins and steady margin were the big positives. Some investors expect Tech Mahindra to start its growth trajectory next quarter based on deal ramp-ups. They anticipate that FY26 revenue growth will outpace FY25's, supported by a strong pipeline and large deal execution. Should investors worry? Some of the issues facing the company are industry-specific and not company-specific. Investors worry that though spending on AI-related infrastructure such as data centers is surging, software and IT services growth rates are expected to slow as businesses delay purchase decisions and reduce discretionary IT budgets. For Tech Mahindra specifically, margin expansion this quarter was seen as a positive. Solid growth in profits and strong deal wins were the other big highlights. However, investors remain wary about revenue growth challenges in certain verticals and the Americas. If IT spending by companies remains weak, particularly in the US and Europe, most Indian IT companies will face a challenging year. As always, you should carefully evaluate a company's fundamentals, corporate governance and valuation before making an investment decision. Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. This article is syndicated from
Mint
17-07-2025
- Business
- Mint
LTIMindtree posts steady Q1 with boost in Europe business
Bengaluru: LTIMindtree Ltd began the new fiscal year on solid footing, reporting revenue growth in line with expectations, led largely by clients in Europe and the retail segment. India's sixth-largest IT services company on Thursday reported $1.15 billion in revenue for the June-ended quarter (Q1FY26), a 1.97% sequential rise. This matched the consensus estimate from a Bloomberg poll of 31 analysts. Nearly three-fourths of its incremental revenue of $22 million came from clients based in Europe, which contributed $170 million in revenue. Retailers, grouped under the 'consumer' vertical, contributed the most to incremental revenue, with the segment bringing in $168 million, or 14.6% of overall revenue. Management expressed optimism despite the challenging macroeconomic environment. 'While the macroeconomic environment remains challenging, I'm confident that our disciplined execution and unwavering client focus will continue to drive our performance,' chief executive Venu Lambu said in the company's earnings release. The commentary echoed that of Tech Mahindra, where CEO Mohit Joshi had said 'the sentiment is still not conducive to significant discretionary investments' in sectors affected by tariffs. LTIMindtree's performance stood out amid a weak demand environment for India's top IT exporters. Wipro reported revenue of $2.59 billion for the April-June quarter, down 0.35% sequentially and 1.5% year-on-year. Its performance was broadly in line with the muted sequential growth posted by peers—Tata Consultancy Services ($7.42 billion, down 0.59%), HCL Technologies ($3.55 billion, up 1.34%), and Tech Mahindra ($1.56 billion, up 0.97%). Infosys Ltd, India's second-largest IT outsourcer, will report its June-quarter results on 23 July. Mint reported in May that LTIMindtree had bagged its largest deal to date—a seven-year, $450 million contract from Archer-Daniels-Midland Co (ADM), a Chicago-based food processing and commodities trading firm. Two analysts who did not wish to be identified said the revenue bump in the June quarter likely stemmed from that large deal. 'It's most likely ADM that might have contributed to the increase in revenue,' said a Mumbai-based analyst on condition of anonymity. Mint could not ascertain whether revenue from LTIMindtree's largest client contributed to the quarterly growth. The company did not hold a press conference following its results. For Venu Lambu, who took over as chief executive on 31 May, the ADM deal is a shot in the arm and is expected to further support revenue growth. Analysts had anticipated the win would add to the company's total contract value. LTIMindtree does not disclose new order wins in its financials. The company also posted a 12.6% sequential jump in net profit to $147 million, aided by lower tax expenses. Operating margins stood at 14.3%, up 50 basis points from the previous quarter. Tech Mahindra reported 11.1% operating margins, a 60-basis-point sequential improvement. Headcount fell by 418 to 83,889 during the quarter, tracking a similar trend at Tech Mahindra, which reduced its workforce by 214 to 148,517. LTIMindtree's results set the tone for India's mid-tier IT firms with annual revenues between $1 billion and $5 billion. These companies not only grew faster than the top five IT majors last year, but also added more headcount. Analysts expect this momentum to continue, with mid-sized firms likely to gain market share from their larger peers, thanks to more agile teams and fewer legacy operations, according to a Mint report dated 7 May.
Time of India
17-07-2025
- Business
- Time of India
Tech Mahindra reports a total headcount of 148,517 as of Jun 30, an increase of 897 year-on-year
IT services firm Tech Mahindra reported a nearly 34 per cent year-on-year increase in consolidated net profit to ₹1,140.6 crore for the quarter ending June 30, 2025, on the back of growth in communications and financial services verticals. The company had logged a net profit (attributable to owners of the company) of ₹851.5 crore in the year-ago period, according to a regulatory filing. The Pune-based company's revenue from operations for the first quarter of 2025-26 grew 2.65 per cent to ₹13,351.2 crore from ₹13,005.5 crore in the same period last year. Sequentially, net profit declined by 2.2 per cent, and revenue saw a marginal dip of 0.2 per cent from the preceding quarter. Discretionary cuts and run-offs hit revenues, and the company expects deal wins to start reflecting in the numbers from the second quarter onwards. The company secured new deals with a Total Contract Value (TCV) of $809 million for the quarter. It added two clients in the $50 million-plus revenue category over the past year. Tech Mahindra CEO and Managing Director Mohit Joshi said the quarterly performance reflects progress aligned with the company's plans in a volatile environment. "Q1 reflects progress aligned with our stated plans. While the environment remains dynamic and uncertain, our continued execution is building confidence that we are on the right path. "The performance was driven by growth in communications, retail and BFSI verticals. The year-on-year headwinds were primarily due to our pre-services business, which we are also saw spending reductions in the automotive sector, which impacted year-on-year revenue performance," he said. Tech Mahindra, under its FY27 vision, targets accelerated topline growth above peer average and margin expansion. Tech Mahindra's revenue growth in Q1 was driven by a 4.7 per cent rise in the Banking, Financial Services, and Insurance (BFSI) vertical, a 3.8 per cent increase in Retail, Logistics, and Transport, and a 2.5 per cent uptick in the Communications segment. However, other sectors faced challenges. The manufacturing vertical saw a 4 per cent decline, impacted by reduced discretionary spending in the automotive segment. Technology, Media and Entertainment vertical dropped by 3.3 per cent due to ongoing restructuring and steep budget cuts at one of the company's semiconductor industry client. Joshi indicated an expectation of a gradual recovery in the hi-tech business in the second half of the year. "The macro picture is still quite certain sectors which have been impacted by tariffs and by demand activity like auto, I think the sentiment is still not conducive to significant stationary investments. In some other sectors, like telecom, for instance, we have seen a stabilisation and growth in this quarter which we expect will continue. For hi-tech, we expect a recovery certainly in the second half of the year," Joshi said. Geographically, the company's European business grew by 11.7 per cent, while the Americas declined by 5.9 per cent. The rest of the world registered a 2.9 per cent increase in business. As of June 30, 2025, Tech Mahindra's total headcount stood at 148,517, an increase of 897 employees year-on-year. Shares of Tech Mahindra settled 1.94 per cent higher at ₹1,609 apiece on the BSE on Wednesday. The financial results were announced after the closing of market hours. PTI
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Business Standard
17-07-2025
- Business
- Business Standard
Tech Mahindra drops 2% after Q1 miss; margin woes ahead or chance to buy?
Shares of Tech Mahindra fell over 2 per cent on Thursday after the company reported a sequential decline in first-quarter earnings, prompting analysts to express caution over margin improvement prospects. The information technology (IT) firm's stock fell as much as 2.21 per cent during the day to ₹1,572 per share. The stock pared some losses to trade 1.22 per cent lower at ₹1,588 apiece, compared to a 0.07 per cent decline in Nifty 50 as of 9:33 AM. CATCH STOCK MARKET LATEST UPDATES LIVE Tech Mahindra Q1 results The IT services and consultancy firm's net profit for the June quarter of the current financial year (Q1-FY26) fell 2.2 per cent sequentially to ₹1,140 crore, while its revenue fell 0.25 per cent to ₹13,351 crore. The results missed Bloomberg estimates on both profit and revenue, which were expected to be ₹1,195.1 crore and ₹13,422.3 crore for the quarter. Communications and banking, financial services and insurance (BFSI) business aided the topline figures, contributing 33.8 per cent and 16.4 per cent to the revenue, respectively. Manufacturing, which includes auto, declined 4 per cent while the technology, media and entertainment business was down 3.3 per cent. New deal wins for the first quarter were $809 million, up 51.5 per cent from last year. The company expects new deals to contribute to the topline from the second quarter. Tech Mahindra management commentary The market is very volatile, and the macro environment continues to remain uncertain. The sentiment is not conducive for discretionary investments, according to Mohit Joshi, chief executive officer of Tech Mahindra. 'It is too early to say the tide has turned for significant growth,' cautioned Joshi. 'Hi-tech has been volatile, and clients cut spending quickly if they fear a recession. During the quarter, the segment was also impacted due to a semiconductor company in the US. We expect a better second half for this business.' Analysts on TechM Q1 results Nuvama Institutional Equities said Tech Mahindra's Q1 performance was mixed, with revenue and profit missing estimates, while Ebit margin was in line with expectations. While the firm has delivered healthy deal wins, Nuvama flagged concerns over its ability to expand margins further amid a weak macro environment and limited operational levers. Despite its relatively lower margin and return profile, the stock continues to trade at valuations comparable to large-cap peers. Nuvama trimmed FY26 and FY27 earnings estimates by under 2.5 per cent and maintained a 'Reduce' rating with a target price of ₹1,300. Antique Stock Broking noted that while Tech Mahindra maintained its FY27 guidance of achieving a 15 per cent Ebit margin and delivered above-average revenue growth, the muted demand environment could make meeting that target difficult. The brokerage currently estimates 7 per cent CC revenue growth for FY27, with Ebit margin improving to 14 per cent, below the company's guidance. Antique maintained a 'Hold' rating with a target price of ₹1,725. Centrum Broking said the near-term demand environment remains constrained in certain verticals, with muted traction in the mobility segment due to client-specific issues. However, ramp-ups in large deals and progress in newer markets like the Middle East are expected to support sequential growth across key segments. The brokerage maintained an 'Add' rating and raised its target price to ₹1,821 from ₹1,604 earlier. TechM share price history Shares of the company snapped a two-day gaining streak and currently trade at 14 times the average 30-day trading volume, according to Bloomberg. The counter has fallen 6.7 per cent this year, compared to a 6.5 per cent advance in the benchmark Nifty 50. Tech Mahindra has a total market capitalisation of ₹1.55 trillion.
Business Standard
17-07-2025
- Business
- Business Standard
Tech Mahindra slips after Q1 PAT drops 2% QoQ to Rs 1,141 cr
Tech Mahindra declined 1.37% to Rs 1,585.85 after the company reported a 2.24% decline in consolidated net profit to Rs 1,140.6 crore on a 0.25% fall in revenue from operations to Rs 13,351.2 crore in Q1 FY26 over Q4 FY25. On a Year on year (YoY) basis, the companys net profit jumped 33.95% while revenue from operations increased 2.66% in Q1 FY26. Profit before tax (PBT) stood at Rs 1,618.1 crore in Q1 FY26, up 10.51% QoQ and 35.35% YoY. EBITDA stood at Rs 1,935.2 crore in the quarter ended 30th June 2025, up 3.63% QoQ and up 23.69% YoY. In terms of dollars (USD), revenue stood at $1,564 million in Q1 FY26, registering growth of 1% QoQ and up 0.4% YoY. In constant currency terms, revenue declined by 1.4% QoQ and down 1% YoY. Profit after tax was at $133 million, down 2% QoQ and up 30.2% YoY. Free cash flow was at $86 million in the Q1 June 2025. During the quarter, EBIT was at $172 million, up 5.4% QoQ and up 30.2% YoY. EBIT margin came in at 11.1% in Q1 FY26, up 50 bps QoQ and 260 bps YoY. The IT firm secured net new deals with a total contract value (TCV) of $809 million in the Q1 June 2025. The total headcount stood at 148,517 in Q1 FY26, The last twelve months (LTM) IT attrition rate stood at 12.6% in Q1 FY26 as against 11.8% in Q4 FY25. Cash and cash equivalents were at Rs 8,072 crore as of 30 June 2025. Mohit Joshi, CEO and managing director, Tech Mahindra, said, Our performance is steadily strengthening, reflecting disciplined execution and a focused strategy. Deal wins have increased by 44% on a last twelve months (LTM) basis, supported by broad-based momentum across verticals and geographies. Rohit Anand, chief financial officer, Tech Mahindra, said, We have delivered seven consecutive quarters of margin expansion - a clear reflection of the discipline and focus across our organization. Even in an uncertain environment, our Project Fortius program continues to generate meaningful results and drive operational improvements. Tech Mahindra offers technology consulting and digital solutions to global enterprises across industries, driving transformation at scale and speed. It provides a full spectrum of services including consulting, information technology, enterprise applications, business process services, engineering services, network services, customer experience & design, AI & analytics, and cloud & infrastructure services.
