Tech Mahindra Q1 FY26: Profit up 34%, margin +260 bps

What Tech Mahindra reported for the June quarter

Tech Mahindra reported its audited consolidated results for the quarter ended June 30, 2025, showing a sharp rise in profit even as revenue growth stayed modest. The company said consolidated revenue increased 2.7% year-on-year to ₹13,351 crore. Consolidated net profit attributable to owners of the company rose 34% year-on-year to ₹1,141 crore, but the company missed Street estimates on profit. The quarter’s numbers came amid a cautious demand environment for Indian IT services firms, with clients delaying decisions due to macroeconomic and geopolitical uncertainty. Tech Mahindra is India’s fifth-largest IT services firm by revenue, and its results were watched closely for signs of recovery in large deal conversion and margin improvement. The company highlighted deal momentum and stable execution as supports during the quarter. The results were announced after market hours.

Headline financials: revenue, profit, and EBIT

On the operating front, Tech Mahindra reported EBIT of ₹1,477 crore, up 34.0% year-on-year. The company’s EBIT margin improved to 11.1%, up 260 basis points year-on-year, according to the company’s release. Profit after tax (PAT) margin expanded to 8.5%, up 190 basis points year-on-year. Diluted EPS for the quarter stood at ₹12.86. While the company delivered a strong year-on-year profit increase, it also reported that on a sequential basis net profit declined by about 2.2% and revenue dipped marginally by about 0.2%. Tech Mahindra’s reported performance therefore combined a year-on-year turnaround with a flatter near-term trajectory.

A closer look at costs and operating levers

The quarterly data provided showed total operating expense at ₹11,874.1 crore for the June quarter. Selling, general and administrative expenses were ₹7,498.9 crore, while other operating expenses totalled ₹2,606.3 crore. Depreciation and amortisation was ₹458.1 crore. The quarter’s operating income was reported at ₹1,477.1 crore and net income before taxes at ₹1,618.1 crore. The company linked profitability improvement to better operating performance and execution, in a quarter where demand conditions remained uneven across markets. Management commentary also referenced workforce optimisation, with headcount and attrition trends reflecting ongoing actions. The broader point for investors was that margin improvement was visible even with only low single-digit revenue growth.

Geography: Americas weakness, offset by other regions

A key narrative from the quarter was the softness in the Americas, Tech Mahindra’s largest region. Reuters reported that revenue from the Americas, which contributes nearly half of the company’s total revenue, fell 5.9% year-on-year. Reuters also described this as the most significant drop in nearly five years, drawing a comparison to the December quarter of FY21 when the sector saw sharp disruption during the pandemic period. Despite the Americas decline, Tech Mahindra indicated that growth in Europe and the rest of the world more than offset the impact at the consolidated level. This regional mix mattered because it shaped both near-term growth visibility and how investors interpret pipeline conversion. It also added context to why consolidated revenue slightly undershot expectations even as profitability improved.

Deal wins: ₹ revenue stays modest, but bookings rise

Tech Mahindra reported new deal wins total contract value (TCV) of $109 million for the quarter. The company also said LTM TCV was up 44%. Reuters reported net new bookings of $109 million, up from $198 million in the prior quarter and $134 million in the same period last year. The company’s own announcement described new deal wins TCV of $109 million and cited year-on-year growth of 51%. Deal wins are closely tracked because they help investors judge whether revenue growth can accelerate once large projects move from signing to execution. In a period when several clients are deferring discretionary spends, bookings traction can be an important counterbalance to near-term revenue softness. Still, conversion timelines can vary by vertical and geography, and the quarter’s numbers do not, by themselves, confirm when that pipeline will translate into billed revenue.

Cash position and balance sheet snapshot

Tech Mahindra reported cash and cash equivalents of ₹8,072 crore at the end of the quarter. The company also disclosed free cash flow of $16 million in its quarter highlights. It said free cash flow was influenced by seasonal factors and an increase in Days Sales Outstanding (DSO). For investors, the cash balance and cash generation metrics are typically assessed alongside margin changes, because they indicate whether profit improvements are backed by cash movements. The June quarter is often affected by working-capital seasonality in IT services, which can shift quarter to quarter. The company’s disclosure helps frame why cash flow can diverge from profit growth in a given period.

Estimates: where the company missed expectations

The company’s Q1 consolidated net profit of ₹1,141 crore was below the Street estimate of ₹1,211 crore cited in the provided text. Reuters reported that consolidated revenue rose to ₹13,351 crore, falling just short of the average analyst estimate of 133.83 billion rupees, which is ₹13,383 crore. The miss was therefore relatively small on revenue, but the profit miss drew attention because the year-on-year improvement was strong. In such quarters, markets often look past the headline miss to understand whether the profitability gains are sustainable and whether deal wins are improving future revenue visibility. The provided text also included preview commentary pointing to constant-currency revenue weakness due to softness in the hi-tech sector and seasonal softness in BPO, suggesting the quarter had mixed operating drivers.

How peers performed in a cautious Q1 for IT

The broader sector context in the provided text pointed to modest single-digit revenue growth for India’s top IT services firms in Q1 FY26. It cited year-on-year revenue growth ranging from 0.8% for Wipro to 8.1% for HCLTech. Infosys was reported to have posted 7.5% revenue growth to ₹42,279 crore and an 8.6% rise in net profit to ₹6,921 crore. Wipro reported revenue of ₹22,135 crore, up 0.77%, and net profit of ₹3,336.5 crore, up 9.8%. HCLTech reported revenue of ₹30,349 crore, up 8.1%, while profit fell 9.7% to ₹3,843 crore, weighed down by higher costs and a one-time hit from a client bankruptcy. Against this backdrop, Tech Mahindra’s quarter stood out for profit growth and margin expansion, even as its top-line growth stayed in the lower band.

Market reaction and timing of the announcement

Tech Mahindra shares closed 1.94% higher at ₹1,609 on the BSE, according to the provided text. The results were announced after market hours, which means immediate price discovery would typically reflect in subsequent sessions. The close prior to the announcement suggested some optimism or positioning ahead of the numbers, but the follow-through would depend on how investors weigh the profit beat versus the estimate miss and the Americas decline. Deal wins and margin expansion were likely to be the focus points in post-result commentary. Investors also often examine management commentary for signs of stabilisation in key verticals and for clarity on demand conditions.

Key numbers table

Why the quarter matters for investors

The June quarter reinforced two parallel themes for Tech Mahindra. First, the company is showing tangible profitability improvement, with a 34% year-on-year rise in net profit and a meaningful EBIT margin expansion. Second, revenue growth remains modest and regionally uneven, with the Americas showing a sharp year-on-year decline. The combination suggests execution and cost levers are supporting earnings, but sustained top-line acceleration would likely depend on stabilisation in the Americas and conversion of recent deal wins. With a bookings figure of $109 million and an LTM TCV increase of 44%, the pipeline metrics were supportive, but investors will still track how quickly these translate into delivered revenue. The company’s disclosures on cash, free cash flow drivers, and margin movement provide additional signals on operational discipline.

Conclusion

Tech Mahindra closed Q1 FY26 with revenue of ₹13,351 crore and net profit of ₹1,141 crore, supported by margin expansion and strong deal wins. The quarter also highlighted pressure in the Americas, partly offset by other regions. With results released on July 16, 2025, the next set of updates will likely be tracked for execution against the deal pipeline, regional performance trends, and whether margin gains hold alongside cautious demand conditions.