Tech Mahindra , a leading global provider of digital transformation, consulting, and business re-engineering services, has reported a robust financial performance for the first quarter, demonstrating resilience and growth amid a challenging global economic environment.

Strong Financial Performance

The company reported a consolidated profit after tax of ₹11,406.00 crore for Q1, marking a significant 34% year-on-year increase. Revenue for the quarter stood at ₹13,351.00 crore, up 2.7% compared to the same period last year.

Tech Mahindra's EBIT (Earnings Before Interest and Taxes) saw a substantial improvement, reaching ₹1,477.00 crore, a 34% increase year-on-year. The EBIT margin expanded by 260 basis points to 11.1%, reflecting the company's focus on operational efficiency and cost management.

Deal Wins and Business Momentum

One of the highlights of the quarter was the strong deal win performance. Tech Mahindra secured new deals with a Total Contract Value (TCV) of $809.00 million, representing a robust 51% year-on-year growth. On a Last Twelve Months (LTM) basis, deal wins have increased by an impressive 44%, indicating sustained business momentum across verticals and geographies.

Mohit Joshi, CEO and Managing Director of Tech Mahindra, commented on the performance: "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."

Operational Highlights

The company's IT services segment showed growth, with revenue up 0.7% quarter-on-quarter. The Business Process Services (BPS) segment performed even better, with a 2.9% quarter-on-quarter increase.

Tech Mahindra's client metrics remained strong, with the number of $50 million+ clients increasing to 26, up by 2 compared to the previous year. The company's top 20 clients now contribute 39% of the total revenue, indicating a healthy mix of large and growing client relationships.

Focus on AI and Innovation

Tech Mahindra has been making significant strides in artificial intelligence (AI) and innovation. The company has developed a portfolio of over 200 enterprise-grade AI agents across various industry segments, many of which are already in use at scale with clients. The company's AI Consulting Practice is enabling clients to validate ROI and prioritize use cases efficiently as they evaluate their AI roadmaps.

Outlook and Strategy

Rohit Anand, Chief Financial Officer of Tech Mahindra, highlighted the company's consistent margin improvement: "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."

The company's strategy focuses on delivering transformative scale at speed, with a full spectrum of services including consulting, IT, enterprise applications, business process services, engineering services, and AI & analytics.

Conclusion

Tech Mahindra's Q1 results demonstrate the company's ability to navigate challenging market conditions while driving growth and profitability. With a strong deal pipeline, focus on AI and innovation, and continued operational improvements, Tech Mahindra appears well-positioned to capitalize on the growing demand for digital transformation services globally.

As the company continues to expand its capabilities and client base, investors and industry observers will be watching closely to see if Tech Mahindra can maintain this momentum in the coming quarters.

Tech Mahindra , a leading global provider of digital transformation, consulting, and business reengineering services, has announced its Q1 financial results, revealing a mix of positive outcomes and challenges.

Financial Highlights

Tech Mahindra reported a 34% year-on-year increase in Q1 net profit to ₹1,141.00 crores, falling short of the estimated ₹1,211.00 crores. Revenue grew by 2.7% YoY to ₹13,351.00 crores, while EBIT rose 34% YoY to ₹1,477.00 crores.

Deal Wins and Business Performance

Tech Mahindra secured new deals with a Total Contract Value (TCV) of $809 million for Q1, representing a substantial YoY growth of 51%. The company's Last Twelve Months (LTM) deal wins have increased by 44%, indicating sustained business momentum across verticals and geographies.

Segment Performance

• IT Services revenue grew by 0.7% quarter-over-quarter (QoQ)
• Business Process Services (BPS) revenue increased by 2.9% QoQ

Key Operational Metrics

Notably, the IT headcount decreased by 622 QoQ to 79,987.

Analyst Views

The Q1 results have sparked divergent views among analysts:

• CLSA, Nomura, and HSBC maintain a positive outlook, citing expected growth pickup and strategic focus.
• Jefferies and Citi remain bearish, pointing to challenging margin targets and rich valuations.

Management Commentary and Outlook

The company expects growth to improve from Q2 onwards, with a target of achieving 15% margins by FY27. Despite the slower revenue growth in Q1, Tech Mahindra's management remains optimistic about future performance.

Strategic Initiatives and Partnerships

Tech Mahindra continues to expand its capabilities and partnerships:

• Launched a new managed services offering for Cisco Multicloud Defense
• Named a Red Hat Premier Partner globally
• Announced partnerships with ServiceNow, CrateDB, and Nuix to enhance various service offerings
• Collaborated with KOGO AI to develop next-gen enterprise AI solutions

As Tech Mahindra navigates through mixed financial results and divergent analyst views, it remains focused on leveraging its strong deal pipeline, expanding partnerships, and investments in emerging technologies like AI to drive growth and value creation for its stakeholders.