Tech Mahindra Q1: Profit jumps, revenue stalls. What's next for investors?
In recent years, Tech Mahindra has expanded through strategic acquisitions and enhanced its focus on emerging technologies such as artificial intelligence, internet of things, and blockchain.
Tech Mahindra announced its results for the first quarter of FY26 after hours on 16 July. The stock was down slightly the next day.
Revenue flat, profit surges
Tech Mahindra reported Q1 2026 revenue that was slightly behind estimates, beat on net profit. Let's take a look at what the company achieved in dollar terms.
Revenue came in at $1.56 billion, up about 0.4% year-on-year. Earnings before interest and taxes (Ebit) increased 30.2% year-on-year to $172 million. Net profit kept pace with Ebita, also increasing 30.2% year-on-year to $133 million. Free cash flow came in at $86 million.
Tech Mahindra's total expenditure fell during the quarter, boosting the bottom line. Revenue from the Americas, which account for the bulk of revenues, fell 5.9% compared to last year. The manufacturing and healthcare & lifesciences verticals shrunk, while BFSI, retail, and logistics & transport grew. New deal wins surged to $809 million from $534 million in the same quarter last year.
What did management say?
Mohit Joshi, CEO and managing director, said: "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."
Rohit Anand, chief financial officer, said, 'We have delivered seven consecutive quarters of margin expansion - a clear reflection of the discipline and focus across our organisation. Even in an uncertain environment, our Project Fortius program continues to generate meaningful results and drive operational improvements."
AI-related services to lead revenue growth
Tech Mahindra has forged key partnerships and is focussing on AI, which should drive growth going forward.
It announced a partnership with Nuix, a global leader in AI-powered investigative analytics and intelligence software to provide innovative, scalable solutions for cyber and fraud detection. The partnership will leverage TechM's extensive expertise in AI, digital engineering and cyber risk management to integrate Nuix's advanced investigative and data analytics solutions into its services, unlocking significant global sales opportunities with the Nuix Neo Solutions.
Tech Mahindra and KOGO AI, a category-defining provider of agentic AI infrastructure, announced a strategic collaboration to jointly build and deliver next-gen enterprise AI solutions and agents designed for autonomy, scale and compliance.
Did the results disappoint?
There were no major disappointments, but the 1% decline in constant-currency revenue was a negative. Weakness in the Americas and in key verticals were other areas of concern. Strong profit growth, deal wins and steady margin were the big positives.
Some investors expect Tech Mahindra to start its growth trajectory next quarter based on deal ramp-ups. They anticipate that FY26 revenue growth will outpace FY25's, supported by a strong pipeline and large deal execution.
Should investors worry?
Some of the issues facing the company are industry-specific and not company-specific. Investors worry that though spending on AI-related infrastructure such as data centers is surging, software and IT services growth rates are expected to slow as businesses delay purchase decisions and reduce discretionary IT budgets.
For Tech Mahindra specifically, margin expansion this quarter was seen as a positive. Solid growth in profits and strong deal wins were the other big highlights. However, investors remain wary about revenue growth challenges in certain verticals and the Americas. If IT spending by companies remains weak, particularly in the US and Europe, most Indian IT companies will face a challenging year.
As always, you should carefully evaluate a company's fundamentals, corporate governance and valuation before making an investment decision.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
First Post
26 minutes ago
- First Post
PM Modi lands in London: All eyes on historic India-UK FTA signing
This is a breaking development. Please refresh the page for the latest updates. read more Prime Minister Narendra Modi landed in London during the early hours of Thursday (July 24). He is on a two-day visit to the UK and is seeking to strengthen defence, trade and technology ties. The formalisation of a long-awaited free trade agreement (FTA) is expected to dominate the agenda. The agreement, hailed as a landmark development, is likely to provide a major boost to economic ties between the two nations. Modi's arrival comes amid efforts by both governments to re-energise their strategic partnership, with hopes high that the deal will cement closer cooperation across multiple sectors. On Thursday, Modi is set to hold talks with British Prime Minister Keir Starmer that are expected to focus on delivering fresh momentum to bilateral relations. STORY CONTINUES BELOW THIS AD Starmer will host Modi at Chequers, the British prime minister's official country residence located about 50 km northwest of London. Commerce Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds are expected to sign the FTA in the presence of both leaders, according to people familiar with the matter. India and the UK reached an agreement on the FTA in May after nearly three years of negotiations. The deal will eliminate tariffs on 99% of Indian exports and make it easier for British firms to sell products such as whisky and cars in the Indian market, while expanding the overall trade basket. The deal is expected to offer full market access for Indian goods across all sectors. Officials said tariff elimination would apply to around 99% of tariff lines, covering nearly the entire trade value between the two countries. In addition to the FTA — described as the UK's most significant trade deal since its departure from the European Union — the two sides concluded a double contribution convention, exempting Indian employers from making social security payments in Britain for their workers. This is a breaking development. Please refresh the page for the latest updates. STORY CONTINUES BELOW THIS AD
NDTV
30 minutes ago
- NDTV
'Processed Food Is Not Bad': Union Minister Chirag Paswan
New Delhi: Union Food Processing Minister Chirag Paswan on Wednesday stressed the need to correct the false narrative that processed food is bad for health. The Food Processing Industries Ministry has set up a committee in this regard, he added. Addressing a press conference to announce the World Food India event, Mr Paswan said that the level of food processing is still low in the country and there is a huge scope for growth in this sector. He said this sector can boost farmers' income and also provide huge job opportunities to youth. Mr Paswan spoke about "misleading advertisements" that brand processed food as "bad". False narratives are being set that processed food loses nutritional value, he added. Mr Paswan said there is a growing demand for ready-to-eat and ready-to-cook foods because of nuclear families and working couples. Food regulator FSSAI ensures the safety of food products, he added. Mr Paswan announced his ministry will hold the flagship conference 'World Food India 2025' in the national capital during September 25-28 to showcase investment potential in this sector and realise the vision of making the country a global food hub. This will be the fourth edition of World Food India. The event will be held on September 25-28 at Bharat Mandapam in the national capital. Industry body FICCI is the national event partner. He also launched a dedicated website and a mobile app for this upcoming event. The event will see participation from many countries. Food Processing Secretary Avinash Joshi said, "Our sector has demonstrated remarkable growth over last decade, now it contributes almost 1/5 of agri product export in the country. Yet we recognise that substantial untapped potential remains." He said the World Food India platform would help in realising this potential. Mr Joshi noted that the earlier editions were successful, and now the ministry intends to scale it further. He said the event will bring together a diverse array of participants, food processors, equipment manufacturers, packaging solution providers, logistic firms, technology developers, academia, startups, retail innovators, state and central government bodies and international delegates. He said one of the major highlights would be the CEOs' round table. More than 100 CEOs from India and overseas will engage directly with policymakers. The theme of World Food India will be based on five pillars -- Sustainability and net zero food processing; India as a Global Food Processing Hub; Frontiers in Food Processing, Products and Packaging Technologies; Food for Nutrition, Health, and Wellness; and Livestock & Marine Products - accelerating the Indian rural economy.
Hindustan Times
30 minutes ago
- Hindustan Times
UP gears up for tourism overhaul: Services, jobs, heritage in focus
LUCKNOW The UP tourism department on Wednesday announced a series of public-focused reforms aimed at boosting tourism, creating local employment and preserving cultural heritage, during a high-level departmental review meeting held at Paryatan Bhawan here. Now, tourist places would be better maintained and have more local homestay options with enriched cultural experiences. (Pic for representation) At the heart of the new directives is the urgent push to fill long-pending vacancies across the tourism and culture department, especially at the district level, which has impacted service delivery to citizens and tourists alike. Officials were instructed to fill pending vacancies immediately — through outsourcing if necessary — to ensure smoother operations in local tourism offices. 'Citizens of UP will soon feel a shift towards a more accessible, community-centred and accountable tourism ecosystem. As the state readies to revise its policies and rejuvenate its institutions, public benefit remains the central theme — from more jobs and better services to a stronger connection with UP's diverse cultural identity,' said minister of tourism and culture Jaiveer Singh during the meeting. He emphasized that the state's 2022 tourism policy will be reframed, drawing best practices from other Indian states, to reflect current needs and public expectations. Now, tourist places would be better maintained and have more local homestay options with enriched cultural experiences. Officials were warned against delays or negligence in implementing public projects. Local jobs, local culture Recognising the untapped potential of rural and tribal regions, officials agreed that homestays be introduced in villages showcasing the unique Tharu tribe culture. This initiative aims to provide employment and income for rural families, while giving tourists an authentic cultural experience. The officials stressed over the importance of developing eco-tourism, calling for a long-term plan to create sustainable destinations that support local ecosystems and economies. The Ganga Gram initiative, which focuses on villages along the sacred river, will be fast-tracked, with all relevant data to be submitted to headquarters promptly. Bringing the world to UP On the international front, officials proposed a strategic outreach campaign to attract foreign tourists, especially from Buddhist countries. The ministry will seek coordination with Indian embassies abroad and request support from the ministry of external affairs to organize roadshows and cultural exchange programmes, building UP's image as a spiritual and cultural hub. Protecting heritage, reviving assets To strengthen historical awareness and educational tourism, officials agreed for installation of informative plaques at heritage sites and historical documentation of each location. The progress on various infrastructure projects was also reviewed, including guest houses and tourism units and emphasized turning loss-making properties into viable assets through public-private partnerships (PPP), where necessary. Illegal encroachments on departmental lands will be removed in coordination with local administrations, and those spaces will be utilized for public-benefit projects, they added. Culture dept under scanner The culture department came under close scrutiny, as the minister expressed dissatisfaction over slow implementation of previous directives. He reviewed recruitment processes, procurement of statues and performance of cultural academies and institutions. The minister reiterated the government's commitment to preserving and promoting the state's rich artistic legacy while ensuring better governance and transparency. Two new MoUs were also signed during the meeting, indicating ongoing collaborations and future partnerships. The meeting was attended by principal secretary Mukesh Kumar Meshram, special secretary Isha Priya (tourism), special secretary Sanjay Kumar Singh (culture), among others.
