Tech Mahindra Q4 FY26: Profit up 16%, stock slips

Why Tech Mahindra shares fell despite a profit jump

Tech Mahindra shares slipped after the company reported a 16% year-on-year rise in consolidated net profit for the March-ended quarter. On Thursday, the stock declined 1.5% to an intraday low of Rs 1,441 on the BSE, even as revenue growth and margin improvement supported the underlying result.

The market response remained mixed as some brokerages pointed to valuation concerns and modest near-term growth expectations. At the same time, strong deal wins and management’s focus on an AI-led operating model provided support to the broader narrative.

Q4 FY26 headline numbers: profit, revenue, and operating performance

For Q4 FY26, Tech Mahindra reported consolidated net profit of Rs 1,353.8 crore, up from Rs 1,166.7 crore in the year-ago quarter. Revenue from operations rose 12.6% YoY to Rs 15,076.1 crore versus Rs 13,384 crore a year earlier.

On a sequential basis, the company reported profit growth of 20.7% and revenue growth of 4.7%. Separately, management commentary cited quarter-on-quarter revenue growth of about 5%.

EBIT increased 10.2% QoQ to Rs 2,084 crore. The company also reported an EBIT margin of 13.8% for the quarter, up 70 basis points QoQ and 330 basis points YoY.

FY26 full-year performance and the stabilisation phase message

For the full fiscal year 2025-26, profit attributable to owners of the company rose 13.15% to Rs 4,810.9 crore from Rs 4,251.5 crore in FY25. Revenue from operations increased 7.2% to Rs 56,815.4 crore.

Management said FY26 marked the conclusion of the company’s stabilisation phase. It also noted that margins improved for the tenth consecutive quarter, despite a challenging macro environment.

Dividend actions and capital allocation focus

The board recommended a final dividend of Rs 36 per equity share (face value Rs 5) for the financial year ended March 31, 2026. This is in addition to an interim dividend of Rs 15 per share paid in November 2025.

CFO Rohit Anand said total FY26 dividend payout rose by more than 13% to Rs 51 per share, the highest in the company’s history. He also highlighted a disciplined capital allocation strategy.

AI-led operating model and deal momentum

CEO and MD Mohit Joshi said Tech Mahindra is embedding artificial intelligence across services as part of its transition to an AI-led organisation. Management linked this push to improved client value delivery and execution focus.

Deal activity was a key positive. The company reported consecutive quarters with deal bookings exceeding $1 billion, and Reuters reported Q4 new deal wins of $1.07 billion compared with $198 million a year earlier.

The company also closed FY26 with deal wins of $1,794 million, described as the highest in the last five years.

What drove growth: vertical performance in focus

Reuters reported that Tech Mahindra’s fourth-quarter revenue beat estimates on strength in manufacturing and BFSI. Revenue from manufacturing and BFSI grew 11.8% and 4.7%, respectively.

The communications business, which management said contributes about a third of revenue, grew 5.6% as the segment stabilised and the company’s largest U.S. client increased spending.

The company said it remains confident of delivering growth in fiscal 2027, while continuing to broaden the portfolio, including through a BFSI push.

Stock reaction: pressure before and after results

Tech Mahindra’s shares were volatile around the results. Reuters noted the stock was down about 6% before the results, pared losses after the announcement, and then closed 2.55% down amid broad-based weakness.

Separately, the stock also saw sharp selling pressure ahead of the results, with reports of a near 5% drop and an NSE level of Rs 1,428.60 at one point. After the results, the stock remained under pressure, with the BSE session noting a 1.5% drop to Rs 1,441.

Brokerage calls: valuation debate versus turnaround optimism

Goldman Sachs maintained a Sell rating and raised its target price to Rs 1,410 from Rs 1,340, implying a 4% downside from then-current levels. It said the Q4 performance was largely in line with expectations and highlighted strong deal wins and margin improvement, but expects FY27 revenue growth to remain modest at around 3.9%. The brokerage flagged valuations as expensive versus peers, with the stock trading at about 18x FY27 estimated earnings.

Motilal Oswal maintained a Buy rating with a target price of Rs 1,750, implying about 20% upside. It highlighted early signs of a turnaround in the communications vertical, supported by a large deal in Europe, and said restructuring under the new leadership is progressing.

HDFC Securities maintained an Add rating with a target price of Rs 1,510 and said FY26 total contract value stood at $1.8 billion. It expects AI-led capabilities and large deal wins to support growth, and noted a target of a 15% EBIT margin in FY27 along with better-than-industry growth.

JM Financial also maintained an Add rating with a target price of Rs 1,555. It expects industry growth in the range of 2-4% or 3-5% and said Tech Mahindra is likely to outperform, citing a decent exit rate and healthy deal TCV supporting FY27 revenue growth.

Key numbers at a glance

What the mixed reaction says about the market’s focus

The earnings print combined multiple positives, including double-digit YoY revenue growth in the quarter, improving margins, and strong deal bookings. But the stock’s move suggested that investors were weighing valuation and the pace of growth beyond the near-term recovery.

Brokerage commentary also reinforced this split. Some focused on expensive multiples and modest FY27 growth expectations, while others emphasised improving execution, communications stabilisation, and the scale of deal wins.

What to watch next

Investors are likely to track how deal wins convert into revenue through FY27, especially as the company expands AI integration across offerings. The evolution of the communications business and traction in BFSI and manufacturing will remain key operational indicators.

The market will also watch progress against stated targets, including the company’s FY27 commitments and the goal of a 15% EBIT margin referenced by brokerages.

Conclusion

Tech Mahindra delivered a 16% rise in Q4 FY26 profit, a 12.6% increase in revenue, and continued margin improvement, alongside strong deal momentum and higher dividends. Still, the stock remained under pressure as valuation concerns and modest FY27 growth expectations kept sentiment balanced. The next few quarters are set to test whether the AI-led shift and deal pipeline translate into sustained, above-industry growth.