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Informist, Tuesday, Oct. 14, 2025

 

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--Tech Mahindra: Saw strong tailwinds in logistics sector in Jul-Sept
--CONTEXT: Tech Mahindra mgmt's comments at post-earnings virtual press call
--Tech Mahindra: Aero segment in manufacturing ops showed good traction
--Tech Mahindra: New deal wins in Jul-Sept were broad-based
--Tech Mahindra: Jul-Sept margin expansion driven by improved productivity
--Tech Mahindra: Impact of changes in H-1B visa norms on co is limited
--Tech Mahindra: Only 1% of co's workforce is on H-1B visa currently
--Tech Mahindra: Unlikely to see V-shaped recovery in spends
--Tech Mahindra: Macroeconomic situation fragile, see it improving in parts
--Tech Mahindra: Co saw good growth in aerospace, consumer products in Q2
--Tech Mahindra: Discretionary spends in Q2 limited

 

By Anand JC and Shakshi Jain

 

NEW DELHI – Information technology major Tech Mahindra Ltd. Tuesday said the global macroeconomic situation is still fragile, even if it is improving in parts, and that it does not expect to see a "V-shaped" recovery in client spends. "But we do see stabilisation and, hopefully, growth in the second half of the (financial) year," Chief Executive Officer and Managing Director Mohit Joshi told reporters at a post-earnings virtual press conference.

 

The company has reported a consolidated net profit of INR 11.95 billion on a revenue of INR 139.95 billion for the September quarter. On a constant currency basis, its revenue grew 1.6% sequentially but fell marginally on year. The company earns nearly 50% of its revenue from the Americas, where revenue fell nearly 3% on year due to the challenging macroeconomic conditions. Revenue from Europe, which contributes a quarter of Tech Mahindra's sales, grew nearly 6% on year.

 

"The growth has been broad-based across manufacturing, BFSI (banking, financial services, and insurance), retail, travel and logistics, and health care," Joshi said. 

 

Discretionary spending is still limited, as some of Tech Mahindra's clients are looking to consolidate their operations. Sectors such as aerospace and consumer products have seen good growth, but others, including telecommunication, are yet to see a revival, Joshi said. "Most of the spend that we are seeing is either consolidation or in areas like autonomous operations that are supposed to lead to significant efficiency benefits in the future," he added.

 

The company won new deals worth $816 million during the reporting quarter, barely higher on year, but up 35% sequentially. "The deal (wins) spanned key verticals, including communications, manufacturing, retail, transport, and logistics," Joshi said. "This reflects the broad-based nature of our wins."

 

The Indian technology industry was rocked towards the end of the September quarter by the Donald Trump administration's decision to raise the cost of skilled worker permits, offered through the H-1B visa programme. Indians have constituted over 70% of the recipients of H-1B visas in recent years, according to media reports. However, Tech Mahindra said its dependence on the programme is limited.

 

"If you look at our overall employee base of about 150,000 people, only 1% of them are on H-1B visas," Joshi said. "Obviously, any change to this programme will have an impact on us, despite the fact that our talent exposure on H-1Bs is quite limited." Tech Mahindra is working on strategies to ensure it can retain top employees in the US amid the risk of poaching.

 

The company has a presence in multiple verticals but earns the majority of its revenue from the communications vertical, which contributes nearly 33% to its earnings. In the September quarter, the revenue from this vertical fell just over 2% on year.

 

"We are witnessing strong tailwinds in the logistics domain, driven by e-commerce expansion, automation and warehousing, last-mile delivery optimisation, and seeing all of these are resulting in strong traction in the logistics sector," Joshi said. This segment contributes nearly 9% to Tech Mahindra's top line.

 

Tech Mahindra's operating margin rose 108 basis points to 12.1% in the September quarter, marking the eighth straight quarter of margin expansion. This margin expansion was driven by improved productivity across projects, savings from selling, general, and administrative expenses initiatives, and benefits from currency depreciation, Chief Financial Officer Rohit Anand said.

 

The company also serves clients in the automotive space, which was broadly stable in the September quarter. "However, we remain cautious, particularly in the commercial segment, which continues to face headwinds, while the passenger vehicle segment shows some early signs of stabilisation," Joshi said.

 

Discretionary spending in the semiconductor industry is expected to pick up in the second half of the financial year. "In the first half of the year, we were impacted with the fact that one of our clients really made a decision to dramatically ramp down a huge portion of their business," Joshi said. The company expects to ramp up some of its deal wins in this sector going forward. 

 

"We are seeing some spending cuts and some headcount reductions among some of the software players," Joshi said. "But again, we feel that they are doing this largely for cost control reasons rather than a significant reduction in their businesses." 

 

Tech Mahindra reported its September quarter earnings after market hours Tuesday. The company's shares gained around 1.2% to close at INR 1,468 apiece on the National Stock Exchange.  End

 

US$1 = INR 88.79

 

Edited by Rajeev Pai

 

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