Techm Management Guidance Tracker

32 forward-looking guidance items tracked across 9 quarters.

Margins

Q1 FY24Subcontracting cost target below 10% of revenueTracked

Management aims to reduce subcontracting costs from current 14% to below 10% of revenue over the next few quarters.

Q1 FY24Offshoring improvement of 3-4% headroomTracked

Management sees potential to improve offshoring mix by 3-4% in the medium term, which would boost margins.

Q2 FY24Rationalization actions to continue in Q3 FY24Active

Management intends to complete portfolio rationalization by Q3, with one-time costs expected to normalize margins by Q4.

Q4 FY24FY27 EBIT margin target of 15%+Tracked

Management targets exceeding 15% EBIT margins by FY27 through Project Fortius and operational improvements.

Q4 FY24Project Fortius annual savings of $250MTracked

Average annual savings of $250 million over three years from cost optimization initiatives.

Q1 FY25Margin improvement levers sufficient even in flat demandActive

Management stated they have enough internal levers to improve margins even without revenue growth, prioritizing margin over revenue.

Q2 FY25FY27 margin target remains unchangedTracked

Management reiterated commitment to significant and predictable margin expansion by FY27, driven by Project Fortius and operational efficiencies.

Q2 FY25Subcon cost reduction to single-digit percentage of revenueTracked

Management expects to reduce subcontractor costs as a percentage of revenue to single digits over time, supporting margin expansion.

Q3 FY25FY27 EBIT margin target of 15%Tracked

Management reiterated commitment to achieving 15% EBIT margin by FY27 through Project Fortius, pricing optimization, and productivity gains.

Q3 FY25Wage hike impact of 1-1.5% in Q4Active

Wage hikes effective Q4 FY25 will impact margins by 1-1.5%, but operating levers are expected to partially offset.

Q1 FY26FY27 margin target of 15% remains intactTracked

Despite macro uncertainty, the company reaffirms its FY27 EBIT margin target of 15%, contingent on growth assumptions.

Q2 FY26EBIT margin target of 15% by FY27 remains intactTracked

Management reiterated commitment to reaching 15% EBIT margin by FY27, with continued margin expansion each quarter.

Q3 FY26FY27 EBIT margin target of 15%Tracked

Company remains on track to achieve 15% EBIT margin by FY27, driven by continued operational improvements and gross margin expansion.

Growth

Q1 FY24H2 recovery expected with gradual improvementTracked

Management expects first half to be tough but second half to see recovery, driven by deal closures and cost actions.

Q4 FY24Above-peer average revenue growth by FY27Tracked

Revenue growth to exceed peer average by FY27, with FY25 as a turnaround year and gradual acceleration.

Q2 FY25Fresher hiring target of 6,000+ for FY25Active

Company is on track to hire over 6,000 fresh graduates this fiscal year, with 2,000+ already onboarded in H1.

Q3 FY25Industry-leading growth by FY27Tracked

Management aims to deliver growth higher than peer average by FY27, supported by large deal pipeline and portfolio rebalancing.

Q1 FY26Revenue growth to improve from Q2 FY26Active

Large deal wins from previous quarters are expected to start contributing to revenue from Q2 onwards.

Q2 FY26Second half of FY26 expected to be better than first halfActive

Management expects improved performance in H2 driven by operational efficiencies and improved demand visibility, despite seasonal furloughs in Q3.

Q2 FY26Net new deal TCV expected to approach $1 billionActive

Management aims to increase quarterly net new deal TCV closer to $1 billion, up from current $816 million, driven by a rich pipeline.

Q3 FY26FY27 revenue growth above peer averageTracked

Management expects to grow higher than the peer average by the end of FY27, supported by strong deal pipeline and large client momentum.

Other

Q2 FY24Medium-term margin and revenue plans to be shared in April 2024Tracked

New CEO Mohit Joshi will present detailed plans for margins, revenue, and organization structure in April 2024.

Q4 FY24Capital allocation: 85% FCF distributionTracked

Board approved policy to distribute at least 85% of free cash flow over five years via dividends or buybacks.

Q1 FY25No wage hikes in near term; revisit in H2Tracked

Management communicated no wage hike currently, will reassess in second half of FY25 based on financial performance.

Q1 FY25Effective tax rate expected 26%-27% for FY25Active

CFO guided that normalized effective tax rate for the year will be in the range of 26%-27%.

Q1 FY26Effective tax rate of ~27% for FY26Tracked

CFO guided that the effective tax rate for FY26 will be around 27%, normalizing from a one-time refund in Q4.

Q2 FY26Capital allocation policy: return 85%+ of free cash flow to shareholdersActive

Board recommended dividend of INR 15 per share; committed to returning at least 85% of free cash flow to shareholders.

Expansion

Q2 FY24New organization structure effective January 1, 2024Active

Six strategic business units will be created to improve client intimacy and operational efficiency.

Capex

Q2 FY25Second-half investments slightly heavier than first halfActive

Investments under Project Fortius (1.5% of margins) will be slightly more in H2 vs H1, but not materially different.

Ai Strategy

Q3 FY25Continued investment in GenAI and partnershipsTracked

TechM will continue investing in GenAI capabilities, including sovereign LLMs, agentic AI, and partnerships with NVIDIA, AWS, and ServiceNow.

Revenue

Q1 FY26FY26 revenue to be better than FY25Tracked

Management expects FY26 revenue growth to exceed FY25 levels, driven by deal conversions and stabilization in key verticals.

Q3 FY26Large deal ramp in H1 FY27Active

The $500M+ European telco deal will start ramping in the first half of FY27, contributing to revenue growth.