Tech Mahindra Records 7th Straight Quarter Of Margin Expansion, Sets Sight On FY27 Target

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Tech Mahindra's Q1 net profit slipped 2% sequentially to Rs 1,141 crore. (Photo: Vijay Sartape/NDTV Profit)

Tech Mahindra Ltd. posted its seventh consecutive quarter of EBIT margin expansion, with margins improving by 76 basis points sequentially to 11.06% in the April-June period.

The IT major continues to progress steadily toward its stated goal of achieving 15% EBIT margin by fiscal year 2027.

In its Q1 concall and earning press conference, the management reiterated their position of being on track with the commitment made in the final quarter of fiscal 2025.

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The improvement in margin in the June quarter came despite seasonal challenges from the Comviva business and elevated visa costs. The management attributed the margin gains to multiple structural levers including reduction in subcontracting expenses, increased offshoring, portfolio integration, and tightened contract governance.

Q1FY26 Earnings Highlights (Cons, QoQ)  

  • Revenue down 0.25% to Rs 13,351 crore versus Rs 13,384 crore (Estimate: Rs 13,411 crore)

  • EBIT up 7.18% at Rs 1,477 crore versus Rs 1,378 crore. (Estimate: Rs 1476.78 crore)

  • EBIT margin up 76 bps at 11.06% versus 10.29%. (Estimate: 11.01%)

  • Net profit down 2.14% at Rs 1,141 crore versus Rs 1,166 crore. (Estimate: Rs 1,189 crore) 

Deal Wins In Q1

Tech Mahindra's deal wins stood out this quarter, totaling $809 million, higher than brokerage estimates of $600–800 million. The communications segment, contributing 33% of total revenue, grew 3% QoQ, offsetting softness in other verticals.

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Management Outlook

The management maintained that FY26 is expected to be stronger than FY25, though they refrained from giving specific numerical guidance due to the ongoing market volatility. They also expect sequential revenue growth from Q2 onward, with large deal wins beginning to ramp up.

With cost efficiencies, automation, and delivery optimisation firmly in place, Tech Mahindra reaffirmed that it remains on track to meet its 15% EBIT margin target by FY27.

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