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Informist, Thursday, Jul. 16, 2026

 

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--Tech Mahindra:Seeing demand across payments, modernisation, wealth platform 
--CONTEXT: Comments by Tech Mahindra's mgmt in post-earnings analyst call 
--Tech Mahindra: AI offers significant opportunity for co 
--Tech Mahindra: Responsible AI, governance key for enterprise AI adoption 
--Tech Mahindra: Saw AI momentum translate to deals in business process svcs 
--Tech Mahindra: Investing in domain-specific, agentic AI 
--Tech Mahindra: Growth momentum set in Q1 will continue for rest of FY27 
--Tech Mahindra: Deals won in previous qtrs to see continued ramp-up in Q2 
--Tech Mahindra: Cautiously optimistic on demand environment for rest of yr 
--Tech Mahindra:Expect to announce wage hikes in Q2 in phased manner 
--Tech Mahindra:Expect growth to continue in mfg and communications vertical 
--Tech Mahindra:Plan to hire a mix of freshers and experienced professionals

 

By Arya S. Biju and Gunjan Rajput

 

MUMBAI/NEW DELHI – Tech Mahindra Ltd. expects the growth momentum set in the June quarter to continue throughout the financial year 2026–27 (Apr-Mar), supported by a strong deal pipeline, execution of deals won in the past 12 months, and deepening of client relationships, the company's management told analysts in a post-earnings call Thursday. The caveat: this is subject to developments in the broader macroeconomic environment.

 

"Barring any sort of unexpected and so far unforeseen macroeconomic developments, we remain confident of the growth momentum that we have set in the first quarter of the year (will) continue for the remainder of the year and that we will meet or exceed our goal of being ahead of peer average for the full financial year as we already are in the first quarter of the financial year," a top company official said.

 

During the quarter ended June, Tech Mahindra reported consolidated revenue of INR 157.12 billion, up over 4% on quarter and higher than INR 154.56 billion expected by analysts. Its bottom line, on the other hand, rose over 8% on quarter to INR 14.65 billion but failed to meet the Street's view of INR 15.80 billion. "We delivered a strong quarter with solid top-line and bottom-line performance, and the ramp-up of large deals remains on track, positioning us well to sustain this momentum," a company official said.

 

The company, however, remains cautiously optimistic about the demand environment for the rest of the year. While demand in the "core is relatively stable", the company is seeing a shift in demand from an application development perspective to a more modernisation perspective. Demand for platform or enterprise applications is strengthening, it said, with strong demand seen for its platforms created in association with ServiceNow, SAP, and Salesforce. Further, the company is seeing demand in the data and artificial intelligence segments, it added. The company, however, sees challenges in areas such as manual testing, traditional big data, standalone e-commerce, and legacy customer relationship management and legacy fragments.

 

Going forward, "AI is increasingly central to our performance and how we deliver value to our clients", the management said. It represents a significant opportunity for Tech Mahindra as "enterprise AI is not a single late technology shift, it cuts across the full services value chain, including consulting, domain use cases, data modernisation, agentic platforms, application engineering, infrastructure operations, testing, customer experience, business process transformation, and increasingly, AI cost governance and operating model redesign." This is where the company's AI-first strategy across information technology and business process services comes together, it said.

 

Across segments, the company has more than 350 deployable AI agents developed across industry and functional use cases. Further, it is deepening its strategic partnerships with hyperscalers and foundational AI players. The company is also investing in domain-specific and sovereign AI, with purpose-built models that understand industry terminology, operate securely, reduce inference costs, and provide stronger contextual accuracy than generic models in specialised environments. "This puts us in a strong position to help our clients move from experimentation to enterprise-scale deployment of AI solutions," the management said. 

 

"We are seeing a clear shift in client demand. Clients are looking for agentic workflows, AI native engineering, autonomous operations, AI-led modernisation, responsible AI, model governance, and better control over AI consumption and cost," the management said. This is bringing AI spin-offs, token economics, model assurance, responsible AI, and outcome-linked delivery to the forefront. Further, the company noted that it is seeing the AI momentum reflected directly in deals in the business process services segment, with the largest deal won in the June quarter being a marquee AI engagement with a large high-tech player.

 

Going forward, the company remains optimistic about both the manufacturing and communications verticals, which together contributed more than 50% of total sales in the June quarter. Revenue from the manufacturing vertical rose 9% sequentially, driven by sustained momentum in the aerospace business along with earlier-than-planned execution of a large European automated program, the company said.

 

Sales from the communications vertical fell 1.3% sequentially. While the underlying communications business remained healthy, reported performance was affected by seasonality in the Comviva business and a "one-time transition associated with clients, post-acquisition integration, and insourcing of cloud revenue", a company official said.

 

Revenue from the banking, financial services, and insurance vertical grew 2.7% on quarter. "We continue to see healthy demand in areas such as payment modernisation, wealth platforms, regulatory compliance, identity and access management, and AI transmission," the management said.

 

During the June quarter, the company's earnings before interest and tax margin expanded 60 basis points sequentially and 330 bps on year to 14.4%. Going forward, Tech Mahindra remains confident of achieving its EBIT margin guidance of 15% for FY27, the management said. "We are very happy with the margin growth that we have been able to deliver," the official said. "I'm also mindful of the fact that we have the wage bill (salary hikes) coming up, and this quarter we will certainly have... some productivity pressures from an AI perspective, and we still have to deliver the 15% margin rate." The management stated that it will announce the wage hikes in a phased manner in the September quarter. Further, with improved sales growth visibility, it plans to increase the hiring of freshers as well as experienced professionals.

 

Thursday, shares of Tech Mahindra ended nearly 1% higher from Wednesday at INR 1,510.30 on the National Stock Exchange.  End

 

Edited by Rajeev Pai

 

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