Tech Mahindra Posts First Revenue Growth in Two Years

Tech Mahindra Reverses Two-Year Revenue Decline in 2025-26

India's fifth-largest IT services company, Tech Mahindra Ltd, has reversed a two-year revenue decline in 2025-26, despite demand uncertainty weighing on the country's $297-billion information technology (IT) services sector. The company's revenue for the fiscal year 2025-26 (FY26) stood at $6.39 billion, marking a 1.9% year-on-year growth. This not only beat Bloomberg's estimate of $6.11 billion from 44 analysts but also marked a significant improvement from the revenue declines of 0.21% and 5% in FY25 and FY24, respectively.

The company's net profit jumped 7% on-year to $537 million. The IT outsourcer's business has seen a significant contribution from manufacturers, which account for almost a fifth of its revenue. Banks and financial institutions, which also account for almost a fifth of its revenue, remain a focus area for the company.

Read also: Market Analysis: Key Stocks to Watch - Narayana Hrudayalaya, ABB India, Federal Bank, Premier Energies, Ather Energy and More

Tech Mahindra's chief executive, Mohit Joshi, attributed the company's growth to its diversified portfolio, which helps mitigate the impact of individual client discretionary cuts or reduced tech spending. The company's large-deal total contract value (TCV) rose 42% from a year ago to $3.79 billion.

While the company does not give revenue guidance, its management expressed caution, citing the global backdrop and geopolitical volatility. However, they are encouraged by the way the company has strengthened its client offerings, built trust, and deepened client engagement approaches over the past two years.

Another bright spot in Tech Mahindra's report card was its operating margins, which jumped 290 basis points (bps) from the preceding year to 12.6%. This can be attributed to the company's three-year plan, Project Fortius, aimed at increasing operating margins to 15% by March 2027 by eliminating low-margin accounts and cutting costs.

Read also: FirstClub Secures $55 Million in Funding from Peak XV, Sofina, and Other Investors 9 Months After $22 Million Series A Round

Experts have differing views on Tech Mahindra's performance. While some, like Ashutosh Sharma, vice-president at Forrester Research, see the company's focus on higher-margin services and operational efficiency as a positive, others, like Phil Fersht, chief executive of HFS Research, flag growth as a concern, stating that the firm has exited stabilization and is now executing on cost discipline and operating leverage.

The company's headcount shrank by 1,108 to 147,623 employees, and while it did not give any headcount target for FY27, it stated that fresher hiring would exceed that of the previous fiscal year. The company's shares closed 2.42% lower at ₹1,464 on BSE, against a nearly 1% fall in the Sensex.