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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
Tech Mahindra's Q1 margin wins face off against macro headwinds
The June-quarter results of Tech Mahindra Ltd had some bright spots. First-quarter Ebit margin rose sequentially for the seventh straight quarter, improving by 56 basis points (bps) to 11.1%, surpassing consensus estimates. Also, a seasonally slow quarter for the company's mobility solutions business, higher visa costs, and lower employee utilisation were offset by savings from TechM's Project Fortius, favourable offshore mix, and optimisation of general and administrative expenses. Offshore mix refers to information technology (IT) service providers allocating software development work to teams located in different countries, mainly for the purpose of saving costs. As part of Tech Mahindra's Project Fortius, the management has retained its margin target of 15% by 2026-27. The company aims to achieve the target within the timeline by consistently hiring fresh graduates, improving its employee utilisation rate, lowering subcontracting costs, higher offshoring, and competitive pricing. 'While the employee pyramid is similar in FY25 compared with FY24, TechM has done better than TCS (Tata Consultancy Services) and Infosys, despite weaker revenue performance," analysts at Kotak Institutional Equities said in a report dated 16 July. 'These elements and a few others will contribute to a sustainable elevated margin profile and narrowing gap in growth versus quality tier-1 peers." Tech Mahindra will decide on wage hikes and the quantum in the fourth quarter of FY26 (January-March 2026). New deal wins were robust and broadbased across business segments. Total contract value (TCV) jumped 52% year-on-year to $809 million, boosted by two large deals worth $50 million each. That was TechM's highest TCV in 13 quarters and the third consecutive quarter with over $700 million. Tech Mahindra expects deal wins of $600-800 million every quarter. Deals are expected to start converting to revenue from the second quarter (July-August), with more expected in the second half of 2026, the management said. Faster and timely conversion of deals is crucial for Tech Mahindra to meet its objective of achieving revenue growth above the peer average by FY27. Macro challenges Tech Mahindra's constant currency revenue fell 1.4% sequentially in Q1, steeper than the estimated 0.8% fall. Revenue was hurt by continued weak discretionary tech spending by customers and delay in deal ramp-ups. The macroenvironment remains uncertain with continued weakness in the automotive, hi-tech, and manufacturing segments, the management cautioned. However, TechM's telecom business surprised with 0.4% sequential revenue growth in a seasonally weak quarter, supported by stabilisation in spending from top clients. But sustenance is crucial. Tech Mahindra has significant exposure to the communications sector (around 34% of revenue) that has been under stress lately, weighing on the information technology service provider's revenue growth trajectory versus peers. Despite the macro headwinds, Tech Mahindra expects FY26 revenue growth (in constant currency terms) to be better than FY25's 0.3% rise. But that may be a tall ask. 'Considering the Q1 weakness, the ask-rate for the rest of the year to achieve flat FY26 CC (constant currency) growth is about 0.8% CQGR (compound quarterly growth rate), which we believe is a little challenging, given the underlying macro uncertainties," PL Capital said in a report dated 16 July. Tech Mahindra's shares are up about 4% in the past year versus a drop in the sector index, Nifty IT. The company's turnaround efforts are showing some progress, which has rewarded the stock. But weak globaldemand may delay meaningful benefits of this strategic overhaul. Tech Mahindra has seen modest earnings downgrades by some brokerages post its first-quarter results. The stock trades at FY27 price-to-earnings multiple of 21x, showed Bloomberg data. 'Despite inferior margins and returns profile, TechM trades at a valuation comparable to large-cap peers," Nuvama Research said in a report dated 16 July. However, it added: 'Margin expansion will be even more difficult hereafter given the low-growth and weak macros and limited levers for expansion."
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.
Economic Times
17-07-2025
- Business
- Economic Times
Tech Mahindra shares in focus after Q1 profit jumps 34% YoY, misses Street estimates
Tech Mahindra shares will be in focus on Thursday after the IT major reported a 34% year-on-year (YoY) rise in consolidated net profit for Q1FY26 to Rs 1,141 crore, up from Rs 851 crore in the same quarter last year. However, the profit missed Street estimates of Rs 1,211 crore. ADVERTISEMENT Revenue for the quarter rose 2.7% YoY to Rs 13,351 crore, compared with Rs 13,005 crore in Q1FY25—slightly below Street expectations of Rs 13,374 crore. The fifth-largest IT services company by market capitalisation reported an EBIT of Rs 1,477 crore, up 34% YoY. The company's dollar revenue stood at $1,564 million in the April–June quarter of FY26, rising 0.4% YoY. Earnings Before Interest and Taxes (EBIT) stood at $172 million, up 30.2% YoY, while the EBIT margin came in at 11.1%, an expansion of 260 basis points profit in dollar terms was $133 million, also up 30.2% YoY. Free cash flow for the quarter stood at $86 million. Tech Mahindra secured new deals with a Total Contract Value (TCV) of $809 million during the quarter. ADVERTISEMENT Commenting on the company's earnings, CEO & Managing Director Mohit Joshi said the 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, he added. ADVERTISEMENT Meanwhile, Chief Financial Officer Rohit Anand highlighted that Tech Mahindra has delivered seven consecutive quarters of margin expansion, which he said reflects the discipline and focus across the organisation. 'Even in an uncertain environment, our Project Fortius program continues to generate meaningful results and drive operational improvements,' Anand company's IT headcount stood at 79,987—down 622 QoQ and 430 YoY. IT LTM attrition was at 12.6%, up from 11.8% in the previous quarter. ADVERTISEMENT The company earned 49.2% of its revenue from the Americas, which declined 6% YoY but grew 2.6% contributed 26% to revenue, rising 11.7% YoY and 3.6% sequentially. Revenue from the Rest of the World (RoW) stood at 24.8%, down 4.5% QoQ but up 2.9% YoY. (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times) ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
17-07-2025
- Business
- Time of India
Tech Mahindra shares in focus after Q1 profit jumps 34% YoY, misses Street estimates
Tech Mahindra shares will be in focus on Thursday after the IT major reported a 34% year-on-year (YoY) rise in consolidated net profit for Q1FY26 to Rs 1,141 crore, up from Rs 851 crore in the same quarter last year. However, the profit missed Street estimates of Rs 1,211 crore. Revenue for the quarter rose 2.7% YoY to Rs 13,351 crore, compared with Rs 13,005 crore in Q1FY25—slightly below Street expectations of Rs 13,374 crore. The fifth-largest IT services company by market capitalisation reported an EBIT of Rs 1,477 crore, up 34% YoY. The company's dollar revenue stood at $1,564 million in the April–June quarter of FY26, rising 0.4% YoY. Earnings Before Interest and Taxes (EBIT) stood at $172 million, up 30.2% YoY, while the EBIT margin came in at 11.1%, an expansion of 260 basis points YoY. Net profit in dollar terms was $133 million, also up 30.2% YoY. Free cash flow for the quarter stood at $86 million. Live Events Tech Mahindra secured new deals with a Total Contract Value (TCV) of $809 million during the quarter. Management Commentary Commenting on the company's earnings, CEO & Managing Director Mohit Joshi said the 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, he added. Meanwhile, Chief Financial Officer Rohit Anand highlighted that Tech Mahindra has delivered seven consecutive quarters of margin expansion, which he said reflects the discipline and focus across the organisation. 'Even in an uncertain environment, our Project Fortius program continues to generate meaningful results and drive operational improvements,' Anand said. The company's IT headcount stood at 79,987—down 622 QoQ and 430 YoY. IT LTM attrition was at 12.6%, up from 11.8% in the previous quarter. Geography-wise Performance The company earned 49.2% of its revenue from the Americas, which declined 6% YoY but grew 2.6% QoQ. Europe contributed 26% to revenue, rising 11.7% YoY and 3.6% sequentially. Revenue from the Rest of the World (RoW) stood at 24.8%, down 4.5% QoQ but up 2.9% YoY. ( Disclaimer : Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
