Tech Mahindra's Q3 FY26: Record Deal Wins and Margin Expansion Drive Strong Performance

Tech Mahindra Limited has reported a robust performance for the third quarter of Fiscal Year 2026 (Q3 FY26), demonstrating significant momentum across its key business segments. The company's consolidated revenue from operations stood at an impressive INR 14,393.2 Crore, marking a 2.7% year-on-year growth and a 1.5% sequential increase on a reported basis. In constant currency terms, revenue grew by 1.3% year-on-year and 1.7% quarter-on-quarter, reflecting the fastest quarterly growth in the last three years. This strong top-line expansion was complemented by a remarkable improvement in profitability, with operating margins expanding by 290 basis points year-on-year to 13.1%, achieving the ninth consecutive quarter of margin expansion. The Profit After Tax (PAT) for the quarter was INR 1,122 Crore, an 8.3% increase year-on-year.

Segmental Performance and Strategic Focus

The company's growth was broad-based, with several verticals contributing meaningfully. The Communications vertical, Tech Mahindra's largest, grew by 4.7% year-on-year, showing signs of stability in the U.S. and strong growth in Europe, bolstered by a significant deal win. Manufacturing continued its strong trajectory with an 11.7% year-on-year growth, driven by traction in aerospace and the ramp-up of a large automotive client in Europe. Retail, Logistics, and Transport also delivered a robust 11.7% year-on-year growth, supported by strong logistics performance and above-normal seasonality in the BPS business for retail.

However, some segments faced headwinds. The BFSI vertical declined by 0.8% year-on-year, primarily due to higher than normal furloughs and the impact of annual productivity gains passed through on a large infrastructure contract. The hi-tech vertical also saw a 4.6% year-on-year decline, with management expecting continued volatility due to client cost pressures and cautious IT spending. Geographically, the Americas grew by 2.1% year-on-year, and Europe delivered strong growth of 11.2% year-on-year. Revenue from the Rest of the World (ROW) declined by 4% year-on-year, although priority markets within ROW grew by 12.9% year-on-year, reflecting the company's focused market strategy.

AI-Led Innovation and Client Engagement

Tech Mahindra's strategic emphasis on AI-led innovation is clearly paying off. The company reported its highest quarterly deal bookings in five years, totaling $1,096 million, and its highest last twelve months (LTM) deal wins in five years, reaching$3,518 million. This robust performance is a testament to the growing relevance of its AI-enabled capabilities and solution-based go-to-market approach. The company is actively supporting clients in moving from AI experimentation to execution at scale, embedding AI across large enterprise engagements, and driving business, process, and operations transformation.

Key AI initiatives include a partnership with Google to accelerate enterprise adoption of Gemini Enterprise, leveraging Gemini 2.5 multimodal models. Tech Mahindra also achieved AWS Generative AI (GenAI) Competency, demonstrating its expertise in implementing generative AI technologies. Internally, over 80,000 employees have been trained in AI and Gen AI, with more than 80% of the sales and support workforce now AI-enabled. The company is also contributing to India's AI mission by developing a Large Language Model (LLM) for education and localizing its TechM Orion platform into Hindi to ensure wider adoption and accessibility.

Outlook and Future Readiness

Management expressed strong confidence in achieving its FY27 goals, which include growing higher than the peer average and progressing towards a 15% EBIT margin. The company's focus on scaling strategic clients is evident, with $50 million-plus clients increasing to 28 (up by 3 YoY) and$20 million-plus clients reaching 64 (up by 3 YoY). Free Cash Flow (FCF) stood at $194 million, with FCF to Operational PAT*% at 131%, reflecting strong cash generation and disciplined working capital management. Return on Capital Employed (ROCE) also strengthened to 26.9%.

Tech Mahindra continues to strengthen its fundamentals through investments in capabilities, scalable platforms, and sharpened go-to-market execution. The company was recognized as a Global Sustainability Leader in the S&P Global's Dow Jones Sustainability Index and received the Best Brands 2025 award. The brand refresh, reinforcing its positioning as a future-ready, AI-aligned transformation partner, further underscores its commitment to long-term value creation. Despite some segmental volatility, the overall narrative points to a company executing effectively on its strategic priorities and building a resilient foundation for sustained growth.