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Informist, Thursday, Apr. 24, 2025

By Rajesh Gajra

NEW DELHI – The management of Tech Mahindra Ltd. Thursday said that though the company did not see deals get cancelled in the March quarter, there was pressure on clients from a cost perspective. Speaking to investors and analysts at a post-earnings conference, the management said that while the company was satisfied with the new deal wins in the March quarter, it started to witness a softness in certain sectors from January onwards.

This softness was seen in the hi-tech vertical and in the automotive sector of the manufacturing vertical segment, the company said. In the communications vertical, where Tech Mahindra primarily operates through its wholly owned subsidiary Comviva, the management said that telecom companies have not been impacted by US tariffs yet because of an exemption.

"There's also a concern about the (telecom) consumers slowing down, especially in the US and the impact that has, as customers trade to cheaper plans," the management said. It said the capex spending by telecom companies continued to be very low and that it was not in an expansionary mode. This meant that opportunities will be limited only to those from consolidation in the telecom industry, the management said.

Meanwhile, the company has been witnessing telecom spends stabilising in the Europe and Asia-Pacific regions, the management said. In the March quarter, the communications vertical revenue was up 1% sequentially, supported by seasonality in Comviva's business.

The manufacturing segment will continue to be a key focus area for the company because of the heritage of the parent company, Mahindra and Mahindra Ltd., the management of Tech Mahindra said in the investor conference. On the business process outsourcing segment, the management said deal ramp-ups that the company was expected did not materialise and have got delayed.

The company will deliver growth in 2025-26 (Apr-Mar) on the back of recent large deal wins and other initiatives being taken, according to the management. However, the year "also looks like it is going to be stressed," in terms of driving earnings growth, it said.

The management said that the company was on track to meet its earnings before interest and taxes margin target of 15% by FY27, through the various transformations and steps being taken under project Fortius. The EBIT margin rose by 360 basis points to 9.7% in FY25 from FY24.

The management said that notwithstanding the headwinds that have arisen in the past three months from the global macroeconomic uncertainties, the company has "established fairly strong guardrails" and was "very focused on delivering on our margin (goals)." On revenue growth, the management said that even though the company has historically trailed its peers in organic growth, the aspiration is to close the gap in FY26 and be ahead of the average growth among peers in FY27.

On Thursday, shares of Tech Mahindra closed 0.4% higher at INR 1,445.20 on the National Stock Exchange of India.  End

Edited by Akul Akhoury and Deepshikha Bhardwaj

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