Large Deal TCV
$809M
+44% YoY (LTM)
Total contract value of large deals won in the quarter, reflecting strong deal momentum.
TECHM
Information Technology
12 Aug 2025
Techm Ltd — Q1 FY26
Tech Mahindra reported Q1 FY26 revenue of INR 13,351 crore, up 2.7% YoY, with PAT of INR 1,141 crore, up 30% YoY.
Financial stats pending filing verification
2-Minute Summary
✦ AI-Generated from Full Transcript
Tech Mahindra reported Q1 FY26 revenue of INR 13,351 crore, up 2.7% YoY, with PAT of INR 1,141 crore, up 30% YoY. EBIT margin expanded 60 bps QoQ to 11.1%, marking the seventh consecutive quarter of margin expansion. Growth was driven by Communications, BFSI, and Retail verticals, while Manufacturing and Hi-Tech declined. Large deal TCV stood at $809 million, up 44% YoY on an LTM basis. Management expects revenue momentum to improve from Q2 as deal wins convert, but flagged ongoing uncertainty in Auto and Hi-Tech due to tariffs and client-specific cuts. The FY27 margin target of 15% remains intact, though growth assumptions may be revisited if macro worsens. Key risk: sustained weakness in Manufacturing and Hi-Tech could delay revenue recovery.
टेक महिंद्रा ने पहली तिमाही में 13,351 करोड़ रुपये की कमाई की, जो पिछले साल से 2.7% ज्यादा है। मुनाफा 1,141 करोड़ रुपये रहा, जो 30% बढ़ा। कंपनी की कमाई और खर्च का अंतर (EBIT मार्जिन) 11.1% हो गया, जो लगातार सातवीं तिमाही में सुधार है। कम्युनिकेशन, बैंकिंग और रिटेल सेक्टर से अच्छी ग्रोथ मिली, लेकिन मैन्युफैक्चरिंग और हाई-टेक में गिरावट आई। बड़े डील्स का कुल मूल्य 809 मिलियन डॉलर रहा, जो पिछले साल से 44% ज्यादा है। कंपनी को उम्मीद है कि अगली तिमाही से कमाई बढ़ेगी, लेकिन ऑटो और हाई-टेक में टैरिफ और ग्राहकों की कटौती से अनिश्चितता है। 15% मार्जिन का लक्ष्य बरकरार है, लेकिन अर्थव्यवस्था खराब हुई तो इसे बदला जा सकता है।
Key Numbers
EBIT Margin
11.1%
+60bps QoQ
Seventh consecutive quarter of margin expansion, driven by cost efficiencies.
Must-Have Account Adds
15
N/A
New Fortune 500/Global 2000 clients added in the quarter, indicating future growth potential.
AI Agents Portfolio
200+
N/A
Enterprise-grade AI agents developed, several in production, supporting AI-led deal wins.
What Changed vs Last Quarter
NEW
FY26 revenue to be better than FY25
Management expects FY26 revenue growth to exceed FY25 levels, driven by deal conversions and stabilization in key verticals.
NEW
Revenue growth to improve from Q2 FY26
Large deal wins from previous quarters are expected to start contributing to revenue from Q2 onwards.
NEW
Effective tax rate of ~27% for FY26
CFO guided that the effective tax rate for FY26 will be around 27%, normalizing from a one-time refund in Q4.
UPDATED
FY27 margin target of 15% remains intact
Despite macro uncertainty, the company reaffirms its FY27 EBIT margin target of 15%, contingent on growth assumptions.
DROPPED
Wage hike impact of 1-1.5% in Q4
Wage hikes effective Q4 FY25 will impact margins by 1-1.5%, but operating levers are expected to partially offset.
DROPPED
Industry-leading growth by FY27
Management aims to deliver growth higher than peer average by FY27, supported by large deal pipeline and portfolio rebalancing.
DROPPED
Continued investment in GenAI and partnerships
TechM will continue investing in GenAI capabilities, including sovereign LLMs, agentic AI, and partnerships with NVIDIA, AWS, and ServiceNow.
NEW RISK
Sustained weakness in Manufacturing and Auto verticals
Tariff uncertainty and client spending cuts continue to pressure the Manufacturing vertical, which declined 4% YoY.
NEW RISK
Hi-Tech vertical headwinds from semiconductor client restructuring
A key semiconductor client implemented sharp budget cuts and workforce reductions, causing a 3.3% YoY decline in Hi-Tech.
NEW RISK
Revenue growth may not materialize as expected
Despite strong deal wins, revenue momentum has lagged; management's expectation of improvement from Q2 may be delayed if macro worsens.
NEW RISK
Margin target dependent on growth assumptions
CFO acknowledged that the FY27 margin target of 15% assumes a certain growth trajectory; if growth disappoints, margins may be revisited.
RISK GONE
Lumpy large deal pipeline
Large deal wins are inherently lumpy; a quarter without major closures could slow revenue growth momentum.
RISK GONE
Wage hike margin headwind in Q4
Wage hikes of 1-1.5% will pressure Q4 margins; offsetting levers may not fully compensate.
RISK GONE
Persistent weakness in European auto and North American telco
Manufacturing declined 2.5% QoQ due to Pininfarina and European auto pressures; North American telco discretionary spend remains challenged.
RISK GONE
Forex losses from cross-currency headwinds
Significant cross-currency headwinds impacted reported revenue; hedging may not fully offset if INR depreciation continues.
Management Guidance
FY26 revenue to be better than FY25
Management expects FY26 revenue growth to exceed FY25 levels, driven by deal conversions and stabilization in key verticals.
Management guidance revenueFY27 margin target of 15% remains intact
Despite macro uncertainty, the company reaffirms its FY27 EBIT margin target of 15%, contingent on growth assumptions.
Management guidance marginsRevenue growth to improve from Q2 FY26
Large deal wins from previous quarters are expected to start contributing to revenue from Q2 onwards.
Management guidance growthEffective tax rate of ~27% for FY26
CFO guided that the effective tax rate for FY26 will be around 27%, normalizing from a one-time refund in Q4.
Management guidance otherKey Risks
Sustained weakness in Manufacturing and Auto verticals
Tariff uncertainty and client spending cuts continue to pressure the Manufacturing vertical, which declined 4% YoY.
high · management_commentaryHi-Tech vertical headwinds from semiconductor client restructuring
A key semiconductor client implemented sharp budget cuts and workforce reductions, causing a 3.3% YoY decline in Hi-Tech.
high · management_commentaryRevenue growth may not materialize as expected
Despite strong deal wins, revenue momentum has lagged; management's expectation of improvement from Q2 may be delayed if macro worsens.
medium · analyst_questionMargin target dependent on growth assumptions
CFO acknowledged that the FY27 margin target of 15% assumes a certain growth trajectory; if growth disappoints, margins may be revisited.
medium · analyst_questionNotable Quotes
This marks our seventh consecutive quarter of margin expansion. This is a significant milestone and speaks of the rigor of our operating model and our continued focus on cost efficiency and the quality of our revenue mix.
Our value lies in helping clients transition from proof of concept to production, from the sandbox to production systems.
If the growth situation turns out worse than that based on the macro, then, of course, there will be a relook at that plan.
Frequently Asked Questions
What was Techm's revenue in Q1 FY26?
Techm reported revenue of ₹13,351 Cr in Q1 FY26, representing a +2.7% change compared to the same quarter last year.
What guidance did Techm management give for FY27?
FY26 revenue to be better than FY25: Management expects FY26 revenue growth to exceed FY25 levels, driven by deal conversions and stabilization in key verticals. FY27 margin target of 15% remains intact: Despite macro uncertainty, the company reaffirms its FY27 EBIT margin target of 15%, contingent on growth assumptions. Revenue growth to improve from Q2 FY26: Large deal wins from previous quarters are expected to start contributing to revenue from Q2 onwards. Effective tax rate of ~27% for FY26: CFO guided that the effective tax rate for FY26 will be around 27%, normalizing from a one-time refund in Q4.
What are the key risks for Techm in FY27?
Key risks include Sustained weakness in Manufacturing and Auto verticals — Tariff uncertainty and client spending cuts continue to pressure the Manufacturing vertical, which declined 4% YoY.; Hi-Tech vertical headwinds from semiconductor client restructuring — A key semiconductor client implemented sharp budget cuts and workforce reductions, causing a 3.3% YoY decline in Hi-Tech.; Revenue growth may not materialize as expected — Despite strong deal wins, revenue momentum has lagged; management's expectation of improvement from Q2 may be delayed if macro worsens.; Margin target dependent on growth assumptions — CFO acknowledged that the FY27 margin target of 15% assumes a certain growth trajectory; if growth disappoints, margins may be revisited..
Did Techm meet its previous quarter's guidance?
Of 1 tracked promise, management 0 met, 0 close, 1 missed.
Where can I read the full Techm Q1 FY26 concall transcript?
The full earnings conference call transcript or source release is available on the linked source material. This page provides an AI-generated summary with filing verification status shown on the financial stats.