Whalesbook
Tech Mahindra announced robust third-quarter financial results, showcasing a 14% year-on-year increase in net profit to ₹1,122 crore. The IT services giant navigated a ₹272 crore one-time labor code cost to achieve this growth. Revenue also saw a healthy 8.3% rise, reaching ₹14,393 crore for the period.
Margin Expansion and Profitability
The company reported a sequential EBITDA increase of 11.3% and a substantial 40% jump on a year-on-year basis. EBIT margins expanded by 100 basis points to 13.1%. Despite the sequential profit decline of 6% due to the exceptional expense, revenue grew 2.8% quarter-on-quarter.
Record Deal Wins Fuel Optimism
CEO and Managing Director Mohit Joshi expressed strong confidence, stating that last twelve months (LTM) deal wins are the highest in five years. "The momentum is a testament to our sustained investments in sales, solution-oriented go-to-market approach and the growing relevance of our AI-led offerings," Joshi remarked. New deal wins reached $1.1 billion, marking a 47% year-on-year and 34.3% sequential increase.
Financial Discipline and Future Outlook
Chief Financial Officer Rohit Anand highlighted the ninth consecutive quarter of margin expansion and continued strength in cash generation. He emphasized improved cash flows and a reduction in Days Sales Outstanding (DSO) due to disciplined working capital management. The company remains on track to meet its FY27 financial goals.
AI Integration and New Revenue Streams
Tech Mahindra is exploring a new pricing model that integrates Artificial Intelligence, including distinct charges for digital labor compared to human labor. This initiative signals a forward-looking approach to service delivery and client engagement in the evolving tech landscape.
Sectoral and Geographic Performance
Retail, logistics, and transport verticals posted the strongest sequential growth of 4%. While technology, media, and entertainment, and healthcare saw quarterly growth, they declined year-on-year. BFSI declined 6.2% sequentially. Geographically, Europe saw an 11.2% increase, driven by automotive and aerospace, while Americas grew 2.1% annually. The high-tech portfolio experienced annual decline but showed positive internal momentum from engineering services.
Workforce Adjustments
The company's IT headcount stood at 76,194, down by 4,671 employees year-on-year. The LTM attrition rate decreased to 12.3% from 12.8% in the previous quarter. Joshi described the headcount reduction as efficiency-driven rather than a "plunge," attributing lower fresh hiring to the current demand environment.