Tech Mahindra Beats Revenue, Margins Despite Profit Miss; Stock Jumps 5%

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AuthorAnanya Iyer|Published at:
Tech Mahindra Beats Revenue, Margins Despite Profit Miss; Stock Jumps 5%
Overview

Tech Mahindra reported Q3 results with net profit falling short of estimates at ₹1,122 crore. However, the IT services firm surpassed expectations on revenue, EBIT, and operating margins. Strong deal wins and constant currency growth signal positive future momentum, offsetting the profit miss and driving a 5% stock rise.

Tech Mahindra Reports Mixed Q3 Results, Stock Surges on Revenue and Margin Beats

Tech Mahindra Ltd. announced its third-quarter financial results on January 16, 2026, revealing a net profit of ₹1,122 crore. This figure fell short of the CNBC-TV18 poll estimate of ₹1,385 crore, marking a 6% year-on-year decline from ₹1,194.5 crore in the prior year.

Revenue and Margins Exceed Expectations

Despite the profit miss, the IT services giant reported quarterly revenue of ₹14,393 crore, surpassing the poll estimate of ₹14,209 crore. This represents a 2.8% increase from the ₹13,995 crore recorded in the same period last year. Earnings Before Interest and Taxes (EBIT) also exceeded forecasts, reaching ₹1,891.6 crore against an estimate of ₹1,804 crore, a 11.3% year-on-year jump. The operating margin improved to 13.1%, beating the estimated 12.7% and showing growth from 12.1% a year ago.

Dollar revenue for the quarter was $1,610 million, higher than the polled $1,593 million, with constant currency revenue growth standing at 1.7%, significantly ahead of the 0.60% estimate. This performance underscores the company's ability to secure business in its key markets.

Robust Deal Pipeline Fuels Optimism

New deal wins during the quarter were a significant highlight, totaling a contract value of $1,096 million. This marks a substantial 47.0% year-on-year growth and a 34.3% quarter-on-quarter increase. Mohit Joshi, CEO and Managing Director, Tech Mahindra, stated that these deal wins on a trailing twelve-month (LTM) basis are the highest in five years. He attributed this momentum to sustained investments in sales, a solution-oriented go-to-market approach, and the growing relevance of AI-led offerings.

Financial Discipline and Future Outlook

The company reported free cash flow of $194 million. Total headcount stood at 149,616, a reduction of 872 employees year-on-year, with LTM IT attrition at 12.3%. Rohit Anand, Chief Financial Officer, noted this quarter reflects a "well-rounded financial performance, marked by the ninth consecutive quarter of margin expansion and continued strength in cash generation." He added that a sustained focus on working capital discipline has led to improved cash flows and a meaningful improvement in Days Sales Outstanding (DSO) to 90 days. Tech Mahindra remains on track toward its FY27 goals.

Market Reaction

Following the announcement, shares of Tech Mahindra Ltd. saw a positive market response, closing up by 5.17% at ₹1,670.55 on the BSE.

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