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Informist, Tuesday, Oct. 14, 2025

By Shakshi Jain and Gopika Balasubramanium

NEW DELHI/MUMBAI – Information technology major Tech Mahindra Ltd. expects higher year-on-year growth for itself and for the sector next year, a top company official told analysts in a post-earnings conference call Tuesday. The official, however, cautioned that the rise was unlikely to be dramatic.

"...we really do not see dramatic growth coming back next year. So... I am personally a little bit sceptical about whether we will have that much of flexibility to have that much of ... profit to invest back into the business. But obviously, as the business continues to perform, we will always calibrate between investments needed in the business and the margins that are due back to investors."

The company official was responding to a question about whether Tech Mahindra would make incremental investments in case it achieves its goal of 15% in earnings before interest and tax margin before the 2026-27 (Apr-Mar) deadline set for itself. As part of its capital allocation policy, Tech Mahindra has been aiming to return at least 85% of the free cash flow generated to shareholders, over a period of five years starting FY25.  

In Jul-Sept, the company had recorded a 108-basis-point sequential improvement in its EBIT margin to 12.1%. Its consolidated revenue rose nearly 5% on quarter to INR 139.95 billion, supported by growth across most of its business verticals and its core American markets.

On segment performance, the management said the automotive segment has been broadly stable but Tech Mahindra remains cautious, particularly in the commercial vehicle segment which "continues to face headwinds." Meanwhile, the passenger vehicle segment has shown early signs of stabilisation. Within the retail, transport and logistics segment, the company is seeing "strong tailwinds" in the logistics domain, driven by e-commerce expansion, automation and warehousing, and last-mile delivery optimisation. In the communications vertical, which registered a 2% sequential decline in Jul-Sept, the company expects stability and growth to return in the second half of the financial year.  

On implications of the latest H-1B visa policy changes, the management said under 1% of its global workforce is in the H-1B base and visa dependence in the US is under 30%. The company is working on a multi-pronged strategy to ensure it was well prepapred on this front. The first is to "identify and firewall" the company's key and core talent in the US. The second is to enhance offers to employees in the US and further diversify the sources of US recruitment. The third is to strengthen existing capabilities. "As you know, we have a large capability to deliver from the Americas locally, whether it's from Canada, Mexico or Brazil," the management said.

On further possible cuts in headcount as the company consolidates some of its support companies, the management said: "Yeah, yeah. I mean, you think about it, right? Portfolio integration is obviously a big part of it, right?" Tech Mahindra's total headcount in IT services fell by 1,459 from the previous quarter to 78,528 as of September.

Tuesday, shares of the company closed around 1% higher at INR 1,468 on the National Stock Exchange. The company released its quarterly results after market hours.  End

Edited by Rajeev Pai and Akul Nishant Akhoury

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