Earnings Outlook
BFSI, retail verticals to lift Tech Mahindra Q2 PAT, sales
This story was originally published at 15:05 IST on 11 October 2025
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By Shakshi Jain
NEW DELHI – Information technology services and consulting major Tech Mahindra Ltd. is expected to post a healthy set of bottom-line and top-line growth numbers for the September quarter, helped by operational efficiencies and growth in select segments. The retail and banking, financial services and insurance verticals saw higher traction in Jul-Sept while the communications segment had a stable quarter, according to analysts.
Tech Mahindra's consolidated bottom line for the reporting quarter is expected to rise 13.5% sequentially to INR 12.94 billion, according to the average of estimates from 17 brokerages. On a year-on-year basis, the profit after tax is expected to grow almost 4%. The highest estimate for net profit is INR 13.63 billion by Nomura Financial Advisory & Securities (India) Pvt. Ltd. and the lowest is INR 12.04 billion by Anand Rathi Share and Stock Brokers Ltd.
The company's revenue for the September quarter is seen rising 3.4% sequentially and 3.7% on year to INR 138.08 billion. The highest estimate for revenue is INR 139.36 billion from Equirus Securities Pvt. Ltd. and the lowest is INR 136.61 billion from Nomura.
Motilal Oswal Financial Services Ltd. credited "ramp-ups of recently won deals" for the revenue growth in the September quarter. Analysts are, however, divided on the reversal of seasonal weakness in subsidiary Comviva's business, which offers digital transformation solutions.
Most brokerages have a dim view on the performance of the manufacturing and hi-tech segments in the September quarter. The hi-tech category is facing pressure from a semiconductor client undertaking restructuring efforts leading to workforce rationalisation and budget cuts.
In dollar terms, the company's revenue for the September quarter is expected to add up to $1.58 billion, as per the average of estimates from 15 brokerages. The estimates vary and are in a narrow range--the lowest is $1.56 billion by Nirmal Bang Equities Pvt. Ltd. and the highest $1.60 billion by Indsec Securities and Finance Ltd. For the June quarter, the company had reported revenues of $1.56 billion.
In constant currency terms, analysts see the company reporting anywhere between (-)1.0-1.1% sequential movement in revenue for Jul-Sept. Most analysts expect the company's new deal wins for the September quarter to come in closer to the upper end of the guided range of $600 million-$800 million. "More important, new deals are won at higher margins," Kotak Securities Ltd. said in a report.
Tech Mahindra recorded new deal wins worth $809 million in the June quarter.
OPERATIONAL PROGRESS
Tech Mahindra is expected to report earnings before interest, tax, depreciation, and amortisation of INR 21.02 billion for the September quarter, according to the average of estimates from seven brokerages. The EBITDA estimates range from a low of INR 20.84 billion by Kotak Securities to a high of INR 21.24 billion by Emkay Global Financial Services Ltd.
The company's earnings before interest and tax or EBIT margin is expected to have improved by 60 basis points sequentially in the reporting quarter to 11.7%, according to the average of estimates from 12 brokerages. This was likely due to lower sub-contractor costs and selling, general, and administrative expenses, according to analysts. Depreciation of the rupee was another factor that likely aided the margin expansion.
In the June quarter, Tech Mahindra's EBIT margin had expanded by 50 basis points to 11.1%. The company is eyeing an EBIT margin of 15% by FY27.
Tech Mahindra had reported a consolidated net profit of INR 11.41 billion for the June quarter and INR 12.50 for the year-ago quarter. Its revenue totalled INR 133.51 billion in Apr-Jun and INR 133.1 billion in the year-ago quarter.
Tech Mahindra will announce its September quarter earnings Tuesday. Investors will watch out for management commentary on the road map for margin expansion, possibility of an uptick in discretionary spending by clients in the second half of the financial year, demand trends across major verticals in the enterprise business, the deal pipeline, and deal closure momentum. Details on the company's hiring plan, besides attrition figures, will also be in focus.
On Friday, shares of Tech Mahindra ended at INR 1,457.20 on the National Stock Exchange, down 0.6%. The stock is down 9.4% since the company reported its results for the June quarter on Jul. 16. The stock is also down 19% from its 52-week high of INR 1,807.7, it had recorded on Dec. 12.
Among the 20 research recommendations on the stock available with Informist, 13 have a "buy" rating on Tech Mahindra while one has a "hold" rating and six have a "sell" recommendation. The average target price of the "buy" recommendations is INR 1,793 and that of the "sell" calls is INR 1,433.
Following are the Jul-Sept earnings estimates for Tech Mahindra from 17 brokerages in descending order of the estimate of net profit in INR million:
|
Broking Firm |
Net Sales (in INR mln) |
Net Profit (in INR mln) |
Revenue (mln $) |
?IT margin |
|
Nomura Equity Research |
136,612.00 |
13,631.00 |
1,570.00 |
11.5 |
|
Nuvama Wealth Management Ltd |
137,733.00 |
13,383.50 |
1,581.00 |
11.8 |
|
HSBC Global Research |
137,640.00 |
13,265.00 |
1,577.00 |
11.7 |
|
YES Securities (India) Ltd |
138,498.00 |
13,130.00 |
||
|
Nirmal Bang Equities Pvt Ltd |
138,317.00 |
13,107.00 |
1,565.00 |
12.1 |
|
Elara Securities (India) Pvt Ltd |
137,718.00 |
13,091.00 |
1,578.00 |
|
|
Emkay Global Financial Services Ltd |
138,793.00 |
13,073.00 |
1,583.00 |
|
|
ICICI Securities Ltd |
139,040.00 |
13,072.00 |
1,582.00 |
11.6 |
|
Motilal Oswal Financial Services Ltd |
139,000.00 |
13,000.00 |
1,588.00 |
11.6 |
|
Indsec Securities and Finance Ltd |
137,600.00 |
12,900.00 |
1,600.00 |
11.8 |
|
JM Financial Institutional Securities Pvt Ltd |
138,459.00 |
12,874.00 |
1,585.00 |
|
|
IDBI Capital Market Services Ltd |
137,606.00 |
12,852.00 |
1,577.00 |
11.6 |
|
Prabhudas Lilladher Pvt Ltd |
137,100.00 |
12,800.00 |
1,576.10 |
11.6 |
|
HDFC Securities Ltd |
137,400.00 |
12,700.00 |
1,576.00 |
11.5 |
|
Kotak Institutional Equities |
138,408.00 |
12,576.00 |
1,580.00 |
11.8 |
|
Equirus Securities Pvt Ltd |
139,364.00 |
12,566.00 |
1,580.00 |
11.8 |
|
Anand Rathi Share and Stock Brokers Ltd |
138,042.00 |
12,044.00 |
||
|
Average |
138,078.24 |
12,944.97 |
1,579.87 |
11.7 |
End
US$1 = INR 88.68
Edited by Akul Nishant Akhoury
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