Tech Mahindra reported 2.6% sequential revenue growth in constant currency for Q1 FY27, reaching $1.66 billion. The company expanded its EBIT margins to 14.4% as it continues to execute a turnaround strategy focused on diversifying beyond its core telecom business. Strong deal wins, totaling over $1 billion in contract value for the third straight quarter, are driving current momentum.
Tech Mahindra has reported a strong start to the 2027 fiscal year, with first-quarter revenue reaching $1.66 billion. In constant currency terms, the company achieved a sequential growth rate of 2.6%, signaling progress in its ongoing business transformation efforts. Following the earnings announcement, the stock saw a positive reaction, rising nearly 3% on the BSE.
Margin Improvement and Deal Momentum
The company's operating performance showed notable improvement, with EBIT margins reaching 14.4%. This represents a 60-basis point increase compared to the previous quarter. A key driver for this stability is the company’s ability to secure new business, as it recorded more than $1 billion in total contract value (TCV) from new deal wins for the third consecutive quarter. Management highlighted that this focus on profitable growth relies on utilizing existing talent and domain expertise to deliver specific business outcomes for clients.
Diversification Across Verticals
Tech Mahindra is actively working to reduce its historical dependence on the telecom sector. The manufacturing vertical performed particularly well during the quarter, posting 9% sequential growth, supported by aerospace projects and automotive programs in Europe. The Banking, Financial Services, and Insurance (BFSI) segment also contributed positively, growing by 2.7% sequentially. Management pointed to steady demand for services related to regulatory compliance, wealth platforms, and AI-led digital transformation within the banking sector. While segments like retail showed modest growth of 1.2%, the communications vertical declined by 1.3% due to seasonal factors affecting Comviva, and the media and entertainment segment contracted by 1.7% as clients adjusted their spending plans.
AI Strategy and Future Outlook
A central pillar of the company’s current strategy is the integration of Artificial Intelligence into its core operations. During the quarter, the company emphasized the scaling of its proprietary AI platform, Tech M Helix. Leadership indicated that AI adoption is being driven by client demand for autonomous operations and AI-native engineering. Internally, the company has focused on productivity, with over 70% of its developers now using AI-assisted coding tools. The company’s ability to sustain this performance will depend on the continued conversion of its large deal pipeline into actual revenue and its success in managing project execution across different global regions. Investors will be monitoring future quarterly filings to track whether these margin improvements can be maintained as the company continues to invest in AI infrastructure and talent.