Tech Mahindra Q3 FY26 Profit Climbs 14% to ₹1,122 Crore

Tech Mahindra Reports Strong Q3 FY26 Performance

Tech Mahindra announced a robust financial performance for the third quarter of fiscal year 2026, ending December 31, 2025. The company reported significant year-on-year growth in profitability and revenue, supported by strong deal momentum and successful internal efficiency initiatives. Net profit saw a notable increase, and operating margins expanded considerably, signaling effective cost management and operational leverage. This quarter's results underscore the company's resilience and strategic focus in a dynamic market environment.

Detailed Financial Breakdown

The company's revenue from operations for Q3 FY26 stood at ₹14,393 crore, marking an 8.3% increase compared to ₹13,286 crore in the same quarter of the previous fiscal year. On a sequential basis, revenue grew by 2.8% from ₹13,995 crore in Q2 FY26. This steady growth reflects a broad-based performance across its key service areas. The company's profitability metrics showed even stronger improvement, highlighting the success of its transformation programs.

Profitability and Margin Expansion

Earnings Before Interest and Taxes (EBIT) for the quarter was ₹1,892 crore, a substantial 40.1% year-on-year increase from ₹1,351 crore in Q3 FY25. Sequentially, EBIT grew by 11.3% from ₹1,699 crore. This led to a significant expansion in the EBIT margin, which reached 13.1%. This represents an improvement of approximately 290 basis points year-on-year and 100 basis points quarter-on-quarter. Profit After Tax (PAT) rose to ₹1,122 crore, up 14.1% YoY from ₹983.2 crore. The operational PAT, excluding exceptional items, grew by an even more impressive 34% YoY, with the corresponding margin expanding by 180 basis points.

Record Deal Wins Signal Strong Demand

A key highlight of the quarter was the robust deal momentum. Tech Mahindra secured new deals with a Total Contract Value (TCV) of USD 1,096 million. This represents a remarkable 47% growth year-on-year and a 34% increase from the previous quarter. This marks the fifth consecutive quarter of strong net new TCV, indicating healthy demand for its services and the effectiveness of its revamped go-to-market strategy. The wins were reportedly led by large deals in the telecom, enterprise, and engineering services verticals.

Management on Execution and Strategy

Management described the quarter as one of strong execution, characterized by broad-based revenue growth and a sharp improvement in profitability. They attributed the significant margin expansion to ongoing transformation initiatives, including 'Project 40s', which continue to drive operating leverage. The leadership team expressed confidence that the robust deal pipeline, particularly the large wins, validates the success of its new organizational structure and client engagement models, positioning the company well for future growth.

Performance Snapshot: Q3 FY26

The following table summarizes Tech Mahindra's key financial metrics for the quarter, providing a comparison with the preceding quarter and the corresponding quarter of the previous year.

While the year-on-year growth is strong across most metrics, the sequential dip in Profit After Tax and EPS is noteworthy, reflecting potential variations in operational costs or other financial factors within the quarter.

Workforce and Operational Metrics

As of the end of Q3 FY26, Tech Mahindra's total headcount stood at 149,616 employees, a slight decrease of 872 from the previous year. The company reported a last twelve months (LTM) IT attrition rate of 12.3%, which is considered a healthy and manageable level within the technology services industry. This indicates stability in its workforce. The company also maintained a strong balance sheet, with cash and cash equivalents recorded at ₹7,666 crore at the end of the quarter.

Analysis and Market Outlook

Tech Mahindra's Q3 FY26 results point towards a successful execution of its strategic priorities focused on profitability and growth. The significant improvement in EBIT margins is a clear indicator that internal efficiency programs are yielding positive results. The strong TCV number is particularly encouraging, as it suggests a healthy demand pipeline and improved market positioning. While the sequential dip in net profit warrants attention, the substantial year-on-year growth in both revenue and operational profit provides a strong foundation for the coming quarters.

Conclusion

In summary, Tech Mahindra delivered a strong quarter marked by significant margin expansion and robust deal closures. The company's ability to drive profitability while securing future revenue streams highlights the effectiveness of its operational and strategic initiatives. With a solid deal pipeline and continued focus on efficiency, the company appears well-positioned to navigate the global technology landscape. Future performance will likely be shaped by its ability to convert its strong order book into sustained revenue growth.