Tech Mahindra reported a subdued June quarter with revenue declining 1.4% sequentially and 1% year-on-year in constant currency, pointing to continued softness in discretionary IT spending. Revenue in dollar terms stood at $1.56 billion—slightly below analyst estimates of $1.57 billion. Despite this, the company recorded a strong 34% year-on-year jump in consolidated net profit to ₹1,140.6 crore, boosted by better operational efficiency and lower subcontracting expenses.
A key contributor to margin gains was “Project Fortius,” Tech Mahindra’s internal initiative aimed at improving cost structure. The EBIT margin rose 50 basis points sequentially to 11.1%, marking the seventh consecutive quarter of improvement. Total deal wins reached $809 million—up 44% year-on-year—primarily driven by demand in telecom, pharma, and digital transformation services across verticals.
Growth in Europe and the Americas stood at 3.6% and 2.6% respectively, while the Rest-of-World segment saw a 4.5% contraction. Among sectors, manufacturing and communication services posted moderate gains, while BFSI and retail saw marginal declines.
Employee Restructuring and Skilling Focus
Amid weaker demand, Tech Mahindra reduced its IT headcount by 622 employees quarter-over-quarter, bringing its total to 79,987. However, its overall workforce, including BPO and support staff, increased by 897, reaching 148,517 employees. The company also saw a rise in attrition—from 11.8% in March to 12.8% in June—while utilisation rates fell slightly to 85%.
On the upskilling front, Tech Mahindra is investing heavily in artificial intelligence. Over 77,000 employees have been trained in AI and generative AI platforms, aligning with the company’s strategic pivot towards next-gen technologies. Leadership changes included the appointments of Amol Phadke as Chief Transformation Officer and Manish Mangal as Head of Americas Communication, signalling a broader internal transformation effort.
Market Reaction and Forward-Looking View
Despite the jump in profit and margin improvements, Tech Mahindra’s shares declined nearly 2% on the Nifty 50 on July 16, emerging among the top losers of the day. The stock drop reflected investor concerns over missed revenue estimates and broader IT sector weakness following muted commentary from peers like TCS (Moneycontrol).
CEO Mohit Joshi acknowledged the revenue softness but emphasized the long-term strategy built on execution discipline and digital transformation. He urged stakeholders to view the current dip as cyclical, not structural, citing strong deal wins and cost efficiencies as key tailwinds.
Analysts, however, noted that the 5.9% year-on-year decline in Tech Mahindra’s Americas revenue—its sharpest since late 2020—remains a concern. The company attributed this to cautious spending by manufacturing and auto clients in the U.S., alongside uncertainties from potential trade tariffs.
While Tech Mahindra’s June quarter reflected a modest revenue dip, strong profitability, margin gains, and a robust deal pipeline underscore its long-term positioning. However, with ongoing macroeconomic uncertainties, especially in North America, the road ahead demands cautious optimism.
