Tech Mahindra, a specialist in digital transformation, consulting, and business reengineering services, announced its fiscal first-quarter earnings report on Wednesday, July 16, 2025. While the company posted a 34% year-on-year (YoY) surge in its consolidated net profit, reaching ₹1,140.6 crore, revenue marginally missed estimates.

Financial Performance

The company's revenue from operations rose 2.7% year-on-year to ₹13,351.20 crore, compared to ₹13,005.50 crore reported during the same period last year. However, this figure marginally missed analysts' expectations of ₹13,374 crore. In dollar terms, revenue stood at $1,564 million, up 0.4% YoY.

Despite the slight revenue miss, Tech Mahindra's profit after tax (PAT) witnessed a significant increase. The consolidated net profit soared 34% YoY to ₹1,140.6 crore, compared to ₹851.5 crore in the corresponding quarter of the previous year. This translates to a PAT of $133 million, up 30.2% YoY. However, the profit attributable to the owners of the company was below Street's estimates of ₹1,211 crore.

The company's EBIT (earnings before interest and tax) also saw substantial improvement, increasing by 34% YoY to ₹1,477 crore. This resulted in an EBIT margin of 11.1%, up 260 bps YoY.

Key Highlights

• New Deal Wins: Tech Mahindra reported new deal wins worth $809 million during the quarter, up 51% YoY.
• Total Contract Value (TCV): The company's deal momentum remained strong, with a 44% growth in TCV over the last twelve months.
• Headcount: Total headcount stood at 1,48,517, an increase of 897 on a YoY basis.
• Attrition: IT attrition over the last twelve months was 12.6 per cent, indicating a relatively stable workforce.
• Cash Position: Cash and cash equivalents at the end of the quarter stood at ₹8,072 crore.

Management Commentary

Mohit Joshi, CEO and Managing Director of Tech Mahindra, commented on the results, stating, "Our performance is steadily strengthening, reflecting disciplined execution and a focused strategy. Deal wins have increased by 44% on a last twelve months (LTM) basis, supported by broad-based momentum across verticals and geographies".

Analysts' Expectations and Outlook

Prior to the earnings release, analysts anticipated subdued revenue growth but improved margins backed by cost optimization and healthy deal wins. Some analysts expected a marginal decline (approximately 0.8 per cent) in sequential revenue growth in constant currency terms. Axis Securities expected Tech Mahindra to report revenue growth of 0.6% on a QoQ basis, led by weakness in the Comviva business and manufacturing and retail business.

Looking ahead, Tech Mahindra is expected to focus on measures to improve margins to 15% by FY2027. Analysts will also be closely monitoring the health of the telecom vertical, growth in the financial services vertical, and reasons for weak hitch and BPO businesses.

Market Reaction

Ahead of the Q1 results, Tech Mahindra shares traded nearly 1% lower, tracking weakness in the tech sector after Tata Consultancy Services' (TCS) Q1 earnings missed street expectations. However, the company's strong profit jump and deal wins may trigger a reversal in the stock's performance.