Tech Mahindra has reported robust third-quarter financial results, demonstrating strong operational performance across key business segments. The IT services major exceeded analyst expectations with comprehensive growth metrics, though certain one-time provisions impacted overall profitability during the quarter.

Financial Performance Overview

The company's quarterly financial metrics showcase significant improvement across multiple parameters:

Revenue performance exceeded estimates by 4.1%, driven by broad-based growth across communications, manufacturing, and retail verticals. The European market contributed significantly with an impressive 11.2% year-on-year growth, highlighting the company's geographic diversification strategy.

Operational Efficiency and Margin Expansion

EBIT margin expansion to 13.1% reflects the company's focus on operational excellence and pricing discipline. The sequential improvement in EBIT was supported by several key factors including improved operating disciplines, strategic pricing approaches, and ongoing benefits from the Project 40s efficiency program. Fixed-price project productivity improvements, volume growth, and enhanced IT utilization contributed to margin expansion, with IT utilization reaching 86.6% during the quarter.

Segment-wise Performance

Both major business segments demonstrated positive growth momentum:

The IT services segment maintained its dominant position while the BPS segment showed stronger sequential growth, indicating balanced performance across the company's service portfolio.

Impact of Exceptional Provisions

PAT declined 6.1% quarter-on-quarter despite strong operational performance due to a one-time exceptional provision of ₹2,724 million (USD 30 million). This provision was made in accordance with new wage code notifications, representing a regulatory compliance measure rather than operational weakness.

Analyst Outlook and Valuation

Deven Choksey has established a target price of ₹1,805 based on December 2027 estimates, applying a 23.0x valuation multiple. However, the rating has been downgraded from "BUY" to "ACCUMULATE" at current levels, citing the sharp run-up in stock price. The valuation basis has been rolled forward to reflect updated long-term estimates, suggesting confidence in the company's fundamental trajectory while acknowledging current market pricing dynamics.

Mahindra EPC Irrigation Ltd delivered exceptional financial performance in Q3FY26, reporting remarkable profit growth that drove its stock price up by approximately 5%. The micro-irrigation systems company, a subsidiary of Mahindra & Mahindra Ltd, announced results showing a 1,411% quarter-on-quarter net profit increase, demonstrating strong operational recovery.

The company's stock reached an intraday high of ₹137, representing a 4.70% increase from the previous close of ₹131. With a market capitalization of ₹363 crores, Mahindra EPC Irrigation has delivered a compounded annual return of 39% over the past three years, reflecting consistent long-term performance in the agricultural technology sector.

Q3FY26 Financial Performance

The company's quarterly results showcased strong growth across key financial metrics. Revenue from operations demonstrated solid expansion both year-on-year and quarter-on-quarter, while profitability showed exceptional improvement.

The revenue growth of 15% year-on-year demonstrates the company's ability to expand its market presence, while the 86% quarter-on-quarter revenue increase reflects strong seasonal performance typical in the agricultural sector.

Nine-Month Performance Highlights

The company's nine-month performance for FY26 has been particularly impressive, with profits already surpassing the previous fiscal year's annual performance. This early achievement indicates strong momentum for the remainder of the fiscal year.

The ₹7.90 crore profit in 9MFY26 has exceeded the previous fiscal year's annual profit of ₹7.20 crore by approximately 10%, demonstrating accelerated profitability growth.

Operational Efficiency Improvements

Mahindra EPC Irrigation has achieved significant operational improvements, particularly in margin expansion. The company's operating profit margin (OPM) showed remarkable enhancement, rising from 2.70% in September 2025 to 11.19% in Q3FY26, representing an increase of 847 basis points.

The company maintains strong long-term growth fundamentals with a three-year profit CAGR of 44%, while sales CAGR for the same period stands at 9%. Despite the strong performance, the company trades at a PE ratio of 23, compared to the industry average of 31, suggesting potential valuation attractiveness.

Business Profile and Sector Context

Mahindra EPC Irrigation Ltd, headquartered in Nashik, Maharashtra, was incorporated in 1986 and operates in the micro-irrigation systems sector. The company's product portfolio includes:

• Drip and sprinkler irrigation systems
• Agricultural pumps
• Greenhouses
• Landscape products

As an agricultural sector company, Mahindra EPC Irrigation experiences seasonal business variations due to weather patterns and monsoon timing. These factors commonly result in stronger performance in the third quarter compared to earlier quarters, as agricultural activity typically peaks during this period. The company's exceptional Q3 performance aligns with typical seasonal patterns while demonstrating superior execution and market positioning.