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Tech Mahindra — Q2 FY25
Tech Mahindra reported Q2 FY25 revenue of INR 13,313 crore (+3.5% YoY) and EBIT margin of 9.6% (+110bps QoQ), driven by Project Fortius savings and currency tailwinds.
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Tech Mahindra reported Q2 FY25 revenue of INR 13,313 crore (+3.5% YoY) and EBIT margin of 9.6% (+110bps QoQ), driven by Project Fortius savings and currency tailwinds. PAT stood at INR 1,250 crore (9.4% margin). Deal wins TCV was $603 million, with BFSI growing 4.5% YoY and communications stabilizing sequentially. Management highlighted disciplined large deal strategy, prioritizing margins over volume. Guidance points to continued margin expansion through cost optimization and fresher hiring. Risks include sustained weakness in telecom vertical, competitive pricing pressure, and potential furlough impact in Q3.
टेक महिंद्रा ने दूसरी तिमाही में 13,313 करोड़ रुपये का कारोबार किया, जो पिछले साल से 3.5% ज्यादा है। कंपनी का मुनाफा 9.6% रहा, जो पिछली तिमाही से 1.1% बढ़ा है। इसकी वजह प्रोजेक्ट फोर्टियस से बचत और डॉलर के मुकाबले रुपये की कमजोरी है। कुल मुनाफा 1,250 करोड़ रुपये रहा। नए सौदों का मूल्य 603 मिलियन डॉलर था। बैंकिंग और वित्त क्षेत्र में 4.5% बढ़ोतरी हुई, जबकि दूरसंचार क्षेत्र स्थिर रहा। प्रबंधन ने कहा कि वे मुनाफे पर ध्यान दे रहे हैं, न कि सिर्फ कारोबार बढ़ाने पर। आगे लागत घटाकर और नए लोगों को काम पर रखकर मुनाफा और बढ़ाने की योजना है। जोखिमों में दूरसंचार क्षेत्र की कमजोरी, प्रतिस्पर्धी दबाव और तीसरी तिमाही में छुट्टियों का असर शामिल है।
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Risk Intelligence
Sustained weakness in telecom vertical
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Read Transcript →Quarter Snapshot
Deal Wins TCV
$603M
+12.9% QoQ
New deal wins total contract value for the quarter, broad-based across key markets.
EBIT Margin
9.6%
+110bps QoQ
Operating margin expanded sequentially due to Project Fortius savings and forex tailwinds.
Free Cash Flow
$157M
105.4% of PAT
Strong cash generation excluding land sale, reflecting operational efficiency.
Headcount
154,273
+2,000 freshers QoQ
Total employees including over 2,000 freshers onboarded; on track for 6,000+ for the year.
What Changed vs Last Quarter
NEW
FY27 margin target remains unchanged
Management reiterated commitment to significant and predictable margin expansion by FY27, driven by Project Fortius and operational efficiencies.
NEW
Fresher hiring target of 6,000+ for FY25
Company is on track to hire over 6,000 fresh graduates this fiscal year, with 2,000+ already onboarded in H1.
NEW
Subcon cost reduction to single-digit percentage of revenue
Management expects to reduce subcontractor costs as a percentage of revenue to single digits over time, supporting margin expansion.
NEW
Second-half investments slightly heavier than first half
Investments under Project Fortius (1.5% of margins) will be slightly more in H2 vs H1, but not materially different.
DROPPED
No wage hikes in near term; revisit in H2
Management communicated no wage hike currently, will reassess in second half of FY25 based on financial performance.
DROPPED
Margin improvement levers sufficient even in flat demand
Management stated they have enough internal levers to improve margins even without revenue growth, prioritizing margin over revenue.
DROPPED
Effective tax rate expected 26%-27% for FY25
CFO guided that normalized effective tax rate for the year will be in the range of 26%-27%.
NEW RISK
Sustained weakness in telecom vertical
Communications vertical declined 1.7% YoY as clients prioritize cost savings; U.S. telecom remains stressed.
NEW RISK
Competitive pricing pressure in large deals
Management noted competitors making 'heroic assumptions' on productivity, potentially leading to aggressive pricing that TechM avoids.
NEW RISK
Furlough impact in Q3
Q3 is seasonally weak due to furloughs; management has limited visibility on magnitude this early.
NEW RISK
Auto sector softness
Manufacturing vertical declined 4% QoQ due to softness in auto, especially in Europe and U.S.
RISK GONE
Telecom recovery may be slower than expected
Management noted telecom sector remains challenged; while decline moderated to single digits, no immediate upturn is expected.
RISK GONE
BFSI volatility due to small portfolio size
Management acknowledged that BFSI vertical is relatively small, so a few million dollars can cause quarter-to-quarter volatility.
RISK GONE
Potential disruption from GenAI on BPS contact center business
Analyst raised concern that BPS contact center services may be first impacted by GenAI; management downplayed but admitted contact center is under 5% of revenue.
RISK GONE
Unexpected furloughs in high-tech sector
Analyst asked about unseasonal furloughs; management confirmed one or two clients but said not material or widespread.
Fast read
Guidance and risk preview
Management reiterated commitment to significant and predictable margin expansion by FY27, driven by Project Fortius and operational efficiencies.
Communications vertical declined 1.7% YoY as clients prioritize cost savings; U.S.
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