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Tech Mahindra is expected to report a sequential decline in constant currency (CC) revenue for the first quarter of FY26; Key points for investors
Tech Mahindra to announce Q1 earnings today
Tech M Q1 Results Today: Tech Mahindra is expected to report a sequential decline in constant currency (CC) revenue for the first quarter of FY26, primarily due to softness in the hi-tech vertical and seasonal weakness in its BPO segment. Although its Comviva unit may provide some support, analysts believe the overall drag from the core business will outweigh any gains.
Despite the revenue dip, analysts project a strong year-on-year (YoY) growth in net profit—up 42%—based on the average estimates from six brokerages. On a sequential basis, CC revenue is likely to fall 0.5%–1%, while dollar revenue may register marginal growth of around 1%. Deal wins, however, are expected to remain strong, with total contract value (TCV) seen at approximately $750 million, up significantly from both the previous quarter and the year-ago period.
Brokerage Views: Mixed Bag on Growth, Positive on Profitability
Kotak Institutional Equities attributes the expected revenue decline to weakness in the hi-tech segment and seasonal drag in Comviva. Despite this, Kotak expects EBIT margin to improve by 60 basis points, driven by rupee depreciation and cost optimisation. It estimates TCV at $750 million, with new wins secured at higher margins. The firm believes FY26 will see muted growth, but profitability should improve.
Investors should closely track management commentary on the path to reaching 15% margins by FY27, turnaround plans, and developments in BFSI and hi-tech verticals. Insights on GenAI-led productivity gains and potential disruptions in BPO will also be key.
Ashika Institute sees revenue declining 0.5%–0.8% in CC terms with flat dollar revenue. It expects a slight margin uptick supported by Project Fortius cost savings. The brokerage is watching for commentary on pricing, attrition, sub-contractor costs, and vertical-specific updates, particularly in BFSI and telecom.
Nomura echoes concerns over weak growth in the communication, media, and technology (CMT) vertical, expecting a sequential CC revenue drop but a 30 bps margin improvement. It forecasts TCV in the $600–800 million range and is looking for management clarity on large deal momentum, demand environment, and FY27 growth targets.
Nuvama expects FY26 to be a transition year as Tech Mahindra focuses on execution, with FY27 set as the real inflection point. The company’s strategy centers on improving predictability, expanding key accounts, and boosting performance in core geographies. Portfolio integration is seen as a major lever.
Anand Rathi has downgraded the stock from “Hold” to “Sell,” citing concerns that the Project Fortius margin goal of 15% may be delayed by over a year due to macro headwinds. It cautioned that faster margin improvements may hurt growth and noted that telecom exposure could dilute margins. The brokerage also flagged an increased BPO contribution to revenue, which has risen by 120 basis points over the last two years under new management.
While deal wins and profitability look promising, Tech Mahindra’s revenue outlook remains muted in the near term. The Street will closely watch for updates on margin roadmaps, turnaround execution, and long-term growth plans, particularly in BFSI and telecom.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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