Tech Mahindra is preparing to launch a transparent, AI-specific metric within the next quarter to provide clearer insights into how artificial intelligence is being priced into business deals. The announcement comes as the IT services sector grapples with accurately measuring and communicating the value of AI integration in client engagements.

Speaking exclusively to CNBC-TV18 on the sidelines of the World Economic Forum in Davos, Managing Director and CEO Mohit Joshi criticized the current trend of reporting AI-linked revenue as more of a marketing exercise than a true reflection of value creation. The company is developing a clearer framework to help investors and clients better understand how AI influences deal economics.

Strong Q3 Performance and Turnaround Progress

Tech Mahindra delivered robust performance in the December quarter, demonstrating the effectiveness of its ongoing transformation strategy.

Joshi emphasized that the turnaround plan outlined to markets in 2024 remains firmly on track, supported by what he described as the best team in the industry. The company has demonstrated a remarkable recovery from being at the bottom of the growth curve in FY23 to outperforming peers in the most recent quarter.

Margin Targets and Strategic Focus

Despite challenging global conditions, Tech Mahindra maintains its commitment to achieving a 15% margin target for the year, which Joshi clarified refers to a full-year average. The company retains sufficient operational levers to protect margins while simultaneously shifting focus toward accelerating growth momentum.

The CEO highlighted the company's strategic positioning to grow above the industry peer-average growth range, marking a significant turnaround achieved in a relatively short timeframe.

Geographic Strategy and Market Positioning

Europe remains a crucial market for Tech Mahindra, particularly through its exposure to the automotive sector, which provides the company with a strong global footprint. However, telecommunications continues to represent the largest business segment, driven primarily by national and domestic demand dynamics rather than global trade flows.

Regarding global uncertainties, Joshi noted it remains too early to forecast the impact of potential tariff wars, emphasizing that trade conflicts benefit no economy. He observed improved client spending sentiment compared to the previous year, creating a more supportive demand environment.

AI as Strategic Opportunity

Joshi positioned artificial intelligence as a clear tailwind for the IT services industry, countering earlier concerns about AI being a potential headwind. He noted increased demand for experienced talent despite AI adoption, with India emerging as the largest pool of trained AI manpower globally.

Using telecommunications as an example, Joshi outlined major AI opportunities in transforming networks, customer relationships, and the B2B landscape. Tech Mahindra is strategically positioned to leverage these opportunities through:

• Building smaller language models
• Partnering with hyperscalers and AI providers
• Driving comprehensive client transformation initiatives

The company's deal win pipeline remains robust, reinforcing confidence in sustained growth momentum over the coming quarters and supporting the overall transformation strategy.

Tech Mahindra Ltd. recorded a significant block trade on the National Stock Exchange (NSE), with institutional investors transacting a substantial volume of shares in a single deal. The transaction highlights continued institutional interest in the IT services major.

Block Trade Details

The NSE block trade involved the following parameters:

Understanding Block Trades

Block trades represent large-volume transactions typically executed between institutional investors, mutual funds, or other large market participants. These trades are conducted outside the regular market mechanism to prevent significant price movements that could occur if such large volumes were traded through normal market orders.

The transaction at ₹1,728.30 per share indicates the price level at which institutional participants were willing to execute this bulk deal. Such trades often reflect strategic portfolio adjustments, institutional rebalancing, or significant investment decisions by large market players.

Market Implications

The ₹17.13 crore transaction value demonstrates the scale of institutional activity in Tech Mahindra shares. Block trades of this magnitude typically indicate confidence in the stock's fundamentals and future prospects, as institutional investors conduct thorough due diligence before executing such significant transactions.

The execution of this block trade at the specified price level provides insight into the institutional valuation of Tech Mahindra shares and reflects the ongoing institutional participation in the stock.