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Informist, Friday, Jan. 16, 2026

By Shakshi Jain and Anand JC

NEW DELHI – Information technology services major Tech Mahindra Ltd. expects a "stable trajectory" for its banking, financial services, and insurance vertical in the coming quarters on normalisation of seasonal factors, company Chief Executive Officer Mohit Joshi said in a post-earnings conference call with investors and analysts Friday. 

Revenue from the BFSI vertical, which accounted for 15.5% of the company's overall top line in the December quarter, declined 6.2% sequentially and 0.8% on year. According to the company's management, this was due to higher-than-usual furloughs in the sector across some markets, for instance Canada, which is an important market for the company.

"...We expect to get back to our quarter-on-quarter growth trajectory. I just want to stress that our ambitions for BFSI remain unchanged. And while this quarter (Oct-Dec) has been weak, there is underlying positive movement in terms of client acquisitions and deal activity," the management said.

While the company's new deal wins were skewed towards the hi-tech and communications verticals in the December quarter, Tech Mahindra recorded "significant renewals" of deals in the BFSI segment, as per the management.

Overall, the management said Tech Mahindra's deal pipeline looks healthy as of now, adding a caveat. "...these things tend to be lumpy...It will continue to be lumpy, so you may see a quarter-on-quarter fluctuation. But overall, we're happy with the pipeline and our odds of winning these deals."

The management earlier in the call affirmed that the company is not compromising on margins to secure large deals. Tech Mahindra aims to increase its earnings before interest and tax margin to 15% by the end of 2026-27(Apr-Mar). In the December quarter, the company's EBIT margin improved by 100 basis points on quarter and 290 bps on year to 13.1%, marking the ninth consecutive quarter of margin expansion for Tech Mahindra.

"...We do not want to do large deals that lose us money. And so, we have continued to stay very disciplined from a pricing and from a profitability perspective. And while obviously large deals involve execution challenges that could dilute margins, we have not upfront signed a money losing deal, we will not do that" the management said.

On demand, the management said it is seeing improvement in technology spending, which is reflecting the financials of the company and its peers. "...more importantly, I'm really delighted about the fact that if I look at our client list, and I look at our clients that give us more than $20 million of revenue, we are consistently growing in that pool. And that really reflects why we are so much more confident about our financial performance," a top company executive said in the call.  

Tech Mahindra's management is confident that the company will be able to deliver on its promise of growing its top line faster than the peer average by March, 2027.

DEMAND ACROSS VERTICALS

Tech Mahindra sees deal opportunities on the back of vendor consolidation in the Europe market for its core communications vertical, the management said. The company believes it is in a unique position with a comprehensive porfolio entailing IT, network, business process services, and software capabilities. Meanwhile, in the US, the company does not see many consolidation-led opportunities for itself as the vendor landscape is already significantly consolidated in that market. "But we are seeing, you know, as opposed to what we were seeing in '23 and '24, a slight loosening of purse strings," the management said.

In the December quarter, the company bagged its biggest deal in the communications vertical in the Europe market. "This is a strategic engagement with the leading European telco, one of the largest wins in the company's history, with a total contract value exceeding $500 million over five years," Joshi said.

In the manufacturing segment, Tech Mahindra is seeing healthy traction in the aerospace and industrial segments. "The US automotive segment continues to remain in wait-and-watch mode, and we expect demand trends to turn more positive over the medium term," the management said.

On the next cycle of wage hike, the management said it is examining the implications of the new labour codes and remains undecided as of now. In the December quarter, the IT player's consolidated bottom line fell 6% sequentially to INR 11.22 billion due to a one-time cost of INR 2.72 billion on implementation of the mandates under the new labour codes. Meanwhile, its consolidated top line in the quarter increased 2.9% sequentially to INR 143.93 billion.

As per the new labour codes, basic pay must account for at least 50% of an employee's total cost to the company. As a result, payouts tied to statutory contributions such as gratuity have increased for companies.

Friday, shares of the company closed 5.2% higher at INR 1,670.50 on the National Stock Exchange. The company declared its December-quarter earnings after market hours.  End

US$1 = INR 90.86

Edited by Deepshikha Bhardwaj

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