Tech Mahindra began fiscal year 2026 with a strong performance, reporting a 33.95% rise in consolidated net profit to ₹1,140.6 crore in the first quarter. This marked a significant improvement compared to ₹851.5 crore in the same period last year and marginally below the previous quarter’s ₹1,167 crore, while comfortably beating analyst expectations. The earnings growth was accompanied by a 2.7% year-on-year increase in revenue to ₹13,351 crore, though this figure slightly missed street estimates and showed a sequential dip in constant currency terms, reflecting ongoing market challenges, particularly in the Americas where a 5.9% revenue decline was recorded—the steepest since December 2020.
Despite subdued revenue growth, Tech Mahindra continued its streak of disciplined execution, driving margin expansion for the seventh straight quarter. The company’s EBIT margin increased by 260 basis points to 11.1%, underlining enhanced operational efficiency. EBIT rose 34% year-on-year to ₹1,477 crore, reinforcing the company’s focus on profitability amid a cautious growth backdrop. Still, the muted revenue growth and broader macroeconomic uncertainties led to a 2% fall in the company’s share price following the results.
A key highlight of the quarter was the robust deal pipeline, with wins totalling $809 million, a 44% increase compared to $534 million a year ago, signaling good traction despite the challenging economic environment. This strong deal momentum is seen as a critical factor offsetting revenue softness, as expressed by CEO Mohit Joshi, who attributed the slight revenue miss to market volatility and sectoral slowdowns, particularly in North America.
Tech Mahindra’s strategic priority remains its aggressive AI drive, which Joshi described as moving decisively “from vision to execution.” Over 200 enterprise-grade AI agents have been deployed, embedded within a hybrid human-AI business model aimed at delivering tangible operational benefits rather than serving as mere auxiliary tools. Internally, the firm has upskilled 77,000 employees in AI competencies, and in a move underlining its commitment to transformation, recently appointed Amol Phadke as Chief Transformation Officer to spearhead these initiatives. The company also formed a partnership with startup KogoAI to develop scalable, compliant frameworks for enterprise AI adoption, illustrating its proactive approach to integrating artificial intelligence into core business practices.
However, challenges remain. Employee attrition ticked up slightly to 12.6%, even as total headcount grew to 148,517, reflecting ongoing pressures in talent retention amidst the broader tech industry labour market dynamics. Joshi highlighted the common difficulty faced by many organisations in scaling AI effectively, noting that most enterprises struggle with fragmented systems and unclear business objectives—a gap Tech Mahindra aims to bridge by tightly aligning AI, talent development, and disciplined execution.
Looking ahead, management maintained cautious optimism for FY2026, expecting it to be stronger than the previous year, though they refrained from giving specific numerical guidance due to persistent market uncertainties. The company targets an ambitious 15% EBIT margin by FY2027, signalling confidence in continued margin improvement driven by strategic investments and operational discipline.
In summary, Tech Mahindra’s Q1 FY2026 results reflect a company navigating a complex economic landscape with a focused strategy on profitability, large deal wins, and pioneering AI integration, positioning itself as a serious contender in the evolving IT services sector despite near-term revenue headwinds.
Source: Noah Wire Services
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