Tech Mahindra posts 33 per cent PAT growth as margin recovery and deal wins continue

Tech Mahindra reported a sharp improvement in profitability for the quarter ended September 30, 2026, with consolidated profit after Tax rising 32.7 per cent year-on-year to Rs 1,586 crore as revenue growth, operating discipline and continued deal momentum lifted margins.

Consolidated revenue increased 15.6 per cent year-on-year and 3 per cent sequentially to Rs 16,180 crore. EBIT rose 40.5 per cent from a year earlier and 5.4 per cent quarter-on-quarter to Rs 2,387 crore, taking EBIT margin to 14.8 per cent. The margin was higher by about 260 basis points year-on-year and 40 basis points sequentially.

The results suggest that the company’s multi-quarter efficiency programme is continuing to translate into earnings growth faster than revenue growth. PAT margin rose to 9.8 per cent from about 8.5 per cent in the corresponding quarter last year, while diluted earnings per share stood at Rs 17.84.

In dollar terms, revenue was USD 1.69 billion, up 6.8 per cent year-on-year in reported currency terms. Constant-currency revenue growth was slightly stronger at 7.2 per cent year-on-year and 2.4 per cent sequentially, indicating that the improvement was not solely driven by currency movement.

The company’s main IT services segment generated revenue of Rs 13,612 crore, compared with Rs 11,767 crore a year earlier. Business Process Services revenue rose to Rs 2,568 crore from Rs 2,228 crore. IT revenue grew 1.7 per cent sequentially, while BPS expanded 3.3 per cent, showing that growth was spread across both reportable businesses.

Deal wins remained an important support for the outlook. New deal total contract value stood at USD 1.02 billion, up 25.4 per cent year-on-year, while last-twelve-month deal wins rose 34.8 per cent to USD 4.27 billion. This means Tech Mahindra has now sustained quarterly deal wins above USD 1 billion for four consecutive quarters, strengthening management’s case that recent revenue growth is supported by the conversion of large engagements rather than a one-off quarterly surge.

The company also continued to deepen larger customer relationships. The number of clients contributing over USD 50 million in annual revenue rose by seven year-on-year to 33, while clients contributing more than USD 20 million increased by three to 66. Larger-account expansion can improve revenue visibility, although execution of large contracts and pricing discipline will remain important in a competitive IT services market.

Chief Executive Officer Mohit Joshi said deal wins exceeding USD 1 billion in each of the last four quarters reflected customer relationships and confidence in the company’s delivery capabilities. Chief Financial Officer Rohit Anand said margins had expanded for the twelfth consecutive quarter and that the company would continue investing in artificial intelligence to improve productivity and build future capabilities.

Cash conversion moderated from the stronger level reported in the June quarter, with free cash flow of USD 135 million, equivalent to 81 per cent of PAT. Days sales outstanding stood at 88 days, while cash and cash equivalents were Rs 7,330 crore at the end of September. IT headcount increased sequentially by 1,928 to 76,617, and last-twelve-month IT attrition was 11.7 per cent.

The board declared an interim Dividend of Rs 15 per equity share of face value Rs 5 for FY27, representing 300 per cent. The record date is October 23, 2026, and payment is due by November 13, 2026. It also recommended a 1:1 Bonus issue, subject to shareholder and regulatory approvals, along with an increase in authorised share capital to Rs 1,000 crore from Rs 924.3 crore.

As of 9:35 am on October 16, 2026, Tech Mahindra shares were trading at Rs 1,733.35, up 5.13 per cent from the previous close. The stock was about 2 per cent below its 52-week high of Rs 1,767.80 and had gained 17.7 per cent over the past year, compared with a 5.17 per cent decline in the BSE 500 over the same period.

Disclaimer: The article is for informational purposes only and not investment advice.