Tech Mahindra Q3 Profit Soars 14% to ₹1,122 Crore, Defying Sector Headwinds

Introduction to Q3 Performance

Tech Mahindra announced a robust financial performance for the third quarter of fiscal year 2026, ending December 31, 2025. The IT services major reported a consolidated net profit of ₹1,122 crore, marking a significant 14.1% increase compared to the same period last year. This growth was achieved despite industry-wide cost pressures, including a one-time charge related to new labour codes. The company's revenue from operations also saw a healthy climb, rising 8.3% year-on-year (YoY) to ₹14,393 crore, signaling strong business momentum and operational resilience.

Detailed Financial Breakdown

The Pune-based company's financial results showcased strength across key metrics. Revenue in US dollar terms stood at $1,610 million, reflecting a sequential growth of 1.7% in constant currency. The company's operating performance improved sharply, with Earnings Before Interest and Tax (EBIT) surging 40.1% YoY to ₹1,892 crore. This operational efficiency translated into a notable expansion of the EBIT margin, which widened by 290 basis points YoY to 13.1%. On a sequential basis, the EBIT margin grew by 100 basis points, marking the ninth consecutive quarter of margin expansion for the firm.

Navigating Sector-Wide Challenges

While the YoY profit growth was strong, Tech Mahindra's net profit saw a 6.07% sequential decline. This was primarily due to a one-time exceptional cost of ₹272.4 crore incurred for the implementation of new labour codes, which impacted gratuity and leave liabilities. This performance stands in contrast to several industry peers who reported steeper profit declines due to similar statutory adjustments. Tech Mahindra's ability to absorb this cost while still posting strong annual growth highlights its effective financial management and operational discipline.

Record Deal Wins Signal Strong Demand

A key highlight of the quarter was the impressive momentum in new deal acquisitions. The company secured new deal wins with a Total Contract Value (TCV) of $1,096 million, a substantial 47% increase from the previous year and a 34.3% rise from the preceding quarter. According to CEO and Managing Director Mohit Joshi, the deal wins on a Last Twelve Months (LTM) basis are the highest the company has achieved in the past five years. This surge reflects a strong demand environment and the growing relevance of the company's AI-led offerings in addressing client needs.

Key Performance Indicators: Q3 FY26 vs Q3 FY25

Management's Confident Outlook

Company leadership expressed strong confidence in the future trajectory. Mohit Joshi stated, “The momentum is a testament to our sustained investments in sales, solution-oriented go-to-market approach and the growing relevance of our AI-led offerings... these efforts are laying a strong foundation for long-term value creation.” Chief Financial Officer Rohit Anand echoed this sentiment, highlighting the well-rounded performance. “This quarter reflects a well-rounded financial performance, marked by the ninth consecutive quarter of margin expansion and continued strength in cash generation... We remain on track in our progress toward our FY27 goals,” Anand said.

Workforce Adjustments and Market Reaction

On the workforce front, Tech Mahindra's total headcount stood at 149,616 as of December 31, 2025, a decrease of 872 employees on a YoY basis. The company attributed this adjustment to efficiency gains from fixed-price projects rather than a reduction in demand. The LTM IT services attrition rate was reported at a stable 12.3%. The stock market responded positively to the strong earnings report. On January 16, 2026, the day the results were announced post-market hours, Tech Mahindra's shares closed 5.17% higher at ₹1,670.55 on the BSE, outperforming the benchmark index.

Conclusion

Tech Mahindra's third-quarter results demonstrate a company successfully navigating a complex macroeconomic environment. By delivering strong growth in profit and revenue, securing record deal wins, and consistently expanding margins, the company has set itself apart from many of its competitors. The management's focus on AI-driven solutions and operational efficiency appears to be yielding positive results, positioning the company for sustained growth as it moves towards its stated fiscal 2027 objectives.