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Tech Mahindra — 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.
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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।
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Sustained weakness in Manufacturing and Auto verticals
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Read Transcript →Quarter Snapshot
Large Deal TCV
$809M
+44% YoY (LTM)
Total contract value of large deals won in the quarter, reflecting strong deal momentum.
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
Revenue growth ahead of peer average by FY27
Goal to achieve revenue growth above peer average by FY27, supported by deal wins and market share gains.
DROPPED
Quarterly deal wins range of $600M-$800M
CFO indicated that the current deal win range of $600M-$800M per quarter is sufficient to support growth targets, with potential to increase if environment improves.
DROPPED
Continued investment in service lines and talent
Planned investments in service line capabilities, ecosystem, and talent, including consulting and AI, with ~1% margin impact from wage hikes and investments.
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
Macroeconomic headwinds in US and auto sector
Management noted softness in US high-tech and auto sectors, with delayed BPS ramp-ups and cautious discretionary spending.
RISK GONE
Tariff impact on telecom and manufacturing
While telecom is currently exempt from tariffs, potential tariff changes and consumer slowdown could pressure client spending.
RISK GONE
Competitive pricing pressure in constrained budgets
Analyst questioned whether prudent deal strategy could be a risk if competitors become more aggressive on pricing.
RISK GONE
Revenue growth dependency on macro recovery
Management acknowledged that margin expansion requires revenue growth, and current macro stress may delay FY27 targets.
🤫 Topics management stopped discussing
Mentioned in Q2 FY25, Q4 FY25
Analyst questioned whether prudent deal strategy could be a risk if competitors become more aggressive on pricing.
Mentioned in Q3 FY25, Q4 FY25
Planned investments in service line capabilities, ecosystem, and talent, including consulting and AI, with ~1% margin impact from wage hikes and investments.
Mentioned in Q2 FY25, Q4 FY25
Management noted softness in US high-tech and auto sectors, with delayed BPS ramp-ups and cautious discretionary spending.
Fast read
Guidance and risk preview
Management expects FY26 revenue growth to exceed FY25 levels, driven by deal conversions and stabilization in key verticals.
Tariff uncertainty and client spending cuts continue to pressure the Manufacturing vertical, which declined 4% YoY.
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