Tech Mahindra, a leading global technology consulting and digital solutions provider, announced its Q2 FY26 financial results, revealing a mixed performance amid a challenging global environment. While revenue experienced moderate growth, profit declined marginally.
Financial Performance
The company's consolidated net profit for the quarter ended September 30, 2025, stood at ₹1,195 crore. This figure fell short of analysts' estimates of ₹1,300 crore and represented a 4.5% year-on-year (YoY) decrease. However, it showed a 4.82% sequential improvement compared to the previous quarter. Adjusting for an exceptional item from the previous year (sale of land), the profit after tax (PAT) actually grew 36% YoY. The PAT was impacted by lower other income due to foreign exchange losses.
Revenue from operations, on the other hand, beat estimates, rising 5.1% YoY to ₹13,995 crore. In dollar terms, revenue reached $1,586 million, a 1.4% increase quarter-on-quarter (QoQ) but a 0.2% decrease YoY. In constant currency terms, the revenue increased 1.6% QoQ but decreased 0.3% YoY. This growth was primarily attributed to the ramp-up of deal wins in the Banking, Financial Services and Insurance (BFSI), retail, and manufacturing sectors.
Tech Mahindra's Earnings Before Interest and Taxes (EBIT) stood at ₹1,699 crore, up 32.7% YoY. The EBIT margin improved significantly by 254 basis points YoY to 12.1%, driven by cost optimization initiatives.
The company declared an interim dividend of ₹15 per equity share.
Operational Highlights
New deal wins for the quarter reached a total contract value of $816 million, a 35% YoY increase. These wins were broad-based, spanning across communications, manufacturing, BFSI, retail, and logistics sectors. One notable win included an AI-native operations deal with a major European bank.
The total headcount stood at 152,714 employees as of September 30, 2025, a decrease of 1,559 from the previous quarter. The IT attrition rate for the last twelve months was 12.8%.
Sectoral and Geographical Performance
The company's largest segment, Communications, which constitutes 32.7% of revenue, experienced a 2.2% YoY decline. However, growth was observed in BFSI, manufacturing, and retail, logistics & transport, with increases of 6.2%, 5.2%, and 7.2% respectively.
Geographically, revenue from the Americas, which accounts for nearly half of the total revenue, fell 2.7% during the quarter. In contrast, revenue from Europe grew 5.5%, while the Rest of the World (RoW) declined 0.5% YoY.
Management Commentary
Mohit Joshi, CEO and Managing Director of Tech Mahindra, stated that the company delivered broad-based growth during the quarter, reflecting the strength of its strategy and execution. He also highlighted the launch of TechM Orion, the company's next-generation AI platform, designed to accelerate autonomous transformation for enterprises. Joshi noted that the Americas saw a decline in revenues due to macroeconomic issues and expressed hope for growth in the second half of the year.
Analyst Views
Brokerage firms have expressed selectively optimistic views on Tech Mahindra's performance. Nomura gave a 'buy' rating on Tech Mahindra stock with a target price of Rs 1,670 per share, noting that deal wins and a strong pipeline support expectations of better revenue growth in FY26 versus FY25. CLSA also has a positive outlook, with a 'high-conviction outperform' rating.
However, some analysts remain cautious. Jefferies has an 'underperform' rating with a target price of Rs 1,270, citing concerns over muted top-line growth and wage cost pressures. Morgan Stanley has an 'underweight' call with a target price of Rs 1,555.
Challenges and Outlook
Despite the moderate revenue growth and margin improvement, Tech Mahindra faces challenges including a cautious growth outlook, weak demand visibility, and potential disruption from AI. Analysts have also pointed out that achieving better-than-industry growth in FY27 would require the company to increase its quarterly deal wins.
