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Informist, Friday, Jan. 17, 2025

By Avishek Rakshit & Arya S. Biju

KOLKATA/MUMBAI – Tech Mahindra Ltd. said Thursday that it would continue to rely on signing large deals across verticals to drive revenue growth and is upping its game by recruiting senior leadership, many of whom are deal-makers, besides expanding its partnership base.

In a call with sector analysts after the company announced its financial results for Oct-Dec, Chief Executive Officer Mohit Joshi said, "We have onboarded 40 plus new clients from our must-have accounts so far in the current fiscal year, of which 12 were onboarded in the December quarter itself. Over two dozen accounts from this must-have list have now crossed the revenue run rate above $1 million annually, and we have won six large deals from the must-have accounts in the current year. We will continue building a high quality and scalable client base that can contribute to our long-term growth."

In the December quarter, the company's total contract value, or valuation of all large new deals, was at $745 million. Of these, four large deals were in the telecommunications segment and one each were in the automotive and the chemicals segments. The communications segment, of which telecom is a part, is the most important revenue generator for Tech Mahindra, accounting for 32.5% of the comopany's revenue. The manufacturing segment accounts for 16.8% of the revenue, followed by banking and financial services at 16.1%. Other segments like technology, media, logistics, health care, retail, and other verticals account for the residual 34.6% of revenue.

Joshi said Tech Mahindra has built a new large deal solutions team comprising "superstar dealmakers" who will help the company identify and oversee complex large deals, especially in the automotive segment, and has hired several top-level officials across the world to drive growth.

"Last quarter, we welcomed Sumit Gopali as head of technology, media, and entertainment as Harshul Asnani transitioned to lead the European business," Joshi said while discussing internal transfers of senior officials. "Sumit comes with a track record of success for over two decades in transforming international businesses across various industries."

Tech Mahindra also appointed a senior industry leader as head of client delivery and operations in Europe and another industry veteran as global head of cloud consulting. "We have onboarded two experienced CIOs in the US and Australia, respectively, to bolster our consultation practice in the elecom space. We've expanded the leadership team for our cybersecurity and risk management practice, our sales force practice, and our Microsoft applications practice," Joshi said.

Going forward, this team is expected to bag more new deals, especially the large ones that will help Tech Mahindra to register good revenue growth. "And just as we build a team of the best-in-class talent, we also invest in strengthening our partner ecosystem," Joshi said. "Through investing in the ecosystem, deal adviser partnerships, improving relationships with the advisory funds, and also the sort of new talent we have brought in, that is allowing us to reach a lot more of these deals," he added.

During Oct-Dec, Tech Mahindra partnered with NVIDIA to come up with a Center of Excellence to drive advances in sovereign large language model frameworks and artificial intelligence. Other partnerships include a tie-up with Amazon Web Services to develop a platform designed for communication service providers and enterprise customers.

At the same time, the company is working towards growing its business globally, particularly in Asia, to balance its portfolio. While communications will continue to be its most important segment, Tech Mahindra is eyeing faster growth in its other industry verticals as well.

However, while the company is focused on large deals, it could face some lumpiness on this score. "From a large deal perspective, deals are a little bit lumpy," Joshi told the analysts. "We do have decent visibility for the next three to six months, and we believe we have created the capabilities that will allow us to deliver consistently. But for large deals, you know, there will be a degree of lumpiness."

While the company remained firm on its margin guidance of 15% by the financial year 2026-27 (Apr-Jun), Chief Financial Officer Rohit Anand said Tech Mahindra could see an impact of 1-1.5% on its margins during Jan-Mar on account of the wage hikes that it will roll out in the quarter. In Oct-Dec, Tech Mahindra reported an earnings before interest and tax margin of 10.2%, up 480 basis points on year despite facing major cross-currency headwinds.

On Friday, shares of Tech Mahindra closed at INR 1,660.3, down 1.6%, on the National Stock Exchange.  End

Edited by Rajeev Pai

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