Tech Mahindra: Q1 Profit Up 34% YoY, Still Falls Short of Street Forecasts
Strong Profit Growth, But Not Quite Enough
Tech Mahindra announced its Q1 FY26 earnings on July 16, 2025, reporting a 34 percent year-on-year rise in net profit. The company posted ₹1,141 crore in consolidated profit for the quarter, compared to ₹851 crore in the same quarter last year.
But here’s the twist: despite the strong YoY jump, the results fell short of analyst expectations, especially on revenue growth.
What About Revenue Numbers?
While profit soared, revenue came in at ₹13,351 crore, marking only a 2.7 percent YoY increase and a 0.25 percent decline from the previous quarter. This was slightly lower than street estimates, and many market experts expected a stronger performance from the tech major.
Why is that happening?
The slower growth is likely due to delays in client spending and slower ramp-ups in certain geographies, according to market watchers.
Geographic Breakdown: Who’s Driving Revenue?
Breaking down revenue by geography shows that growth was led by the Europe and North America regions. Europe grew around 6 percent YoY; North America was flat to mildly positive. India and Asia‑Pacific saw slower growth, reflecting macroeconomic and client budget pressures in those markets.
EBIT and Margins Offer Some Relief
Even with revenue lagging, EBIT (earnings before interest and tax) rose 7.18 percent quarter-on-quarter to ₹1,477 crore, up from ₹1,378 crore. This helped the company achieve an EBIT margin of 11.1 percent, up from 10.5 percent last quarter.
This slight margin expansion has been seen as a positive development, showing better cost control and stronger execution.
Digital and AI Services Drive Segment Growth
One of the core strengths this quarter was growth in digital initiatives. Tech Mahindra reported double-digit growth in areas like AI platforms, automation, and cloud-native services. As enterprises modernise, the company’s focus on digital transformation is paying off.
Management also highlighted that AI-led projects won in Q1 had higher average deal sizes than traditional outsourcing.
Deal Wins Give Hope for Future Growth
One of the brightest spots in Tech Mahindra’s report was its deal wins, which rose 44 percent YoY to $359 million.
Does this signal recovery?
Yes, it points to improving demand, especially in digital transformation and AI-driven solutions, areas where Tech Mahindra has been investing heavily.
The company’s management emphasized that the pipeline remains healthy, and they expect growth momentum to improve over the next two quarters.
CEO’s Comment Reflects Optimism
Tech Mahindra’s CEO, Mohit Josh, said the company is “seeing strong traction in newer technologies,” adding that demand for cloud, engineering services, and Gen AI platforms is growing fast.
He acknowledged the revenue softness but reassured investors about a strong second half of the fiscal year.
Market Reaction Remains Mild
Despite the 34 percent profit growth, Tech Mahindra shares remained flat to slightly down in early trading. Investors seem to have priced in the results beforehand, and the revenue miss likely capped any major upside.
Is the market worried?
Not entirely, analysts believe Tech Mahindra is still in a recovery phase, and upcoming quarters may reflect better execution.
Sector Performance Comparison
Compared to its peers like Infosys and TCS, Tech Mahindra’s revenue growth looks slightly softer, but margin improvement and deal pipeline are giving it a fighting edge.
According to analysts, “The real test for Tech Mahindra will be whether it can sustain margin gains while improving its top-line over the next two quarters.”
Global Market Trends Impacting Tech Mahindra
Tech Mahindra’s Q1 results did not happen in isolation; global IT spending is shifting. Recent reports show cloud infrastructure and AI services are expanding rapidly in North America and Europe. These trends create both opportunity and competition for the company. If Tech Mahindra captures even a small share of the growing AI services market, it could significantly boost revenue in the coming quarters.
Social Media Reactions
On X (formerly Twitter), financial experts commented on the results:
Market Updates by ScanX (@mupdatesbyscanx):
“Tech Mahindra announced strong Q1 financial results with a 34% year-over-year increase in consolidated profit.”
Analyst Commentary and Market Expectations
Analysts from Motilal Oswal and Bank of America believe Tech Mahindra’s margin uptick is well-timed. They expect revenue growth to pick up in H2 FY26 as deal wins begin to convert fully.
Some forecasts suggest revenue may grow 8–10 percent in FY27 if digital traction remains strong.
Final Take
While Tech Mahindra delivered a strong YoY profit growth, the slight revenue miss and muted market reaction tell a more complex story. The company’s growing deal pipeline, AI focus, and better margins are encouraging signs, but the next quarter will be crucial to see whether those translate into stronger revenue traction.
FAQ’S
Tech Mahindra reported a Q1 profit of ₹1,141 crore for FY26, up 34% year-on-year. This shows strong improvement in earnings despite revenue pressure.
The future looks positive with a growing focus on AI, cloud, and digital services. Strong deal wins and margin gains suggest a recovery phase ahead.
Tech Mahindra is in profit, with ₹1,141 crore earned in Q1 FY26. This marks a 34% increase compared to the same quarter last year.
Analyst opinions are mixed, but the current valuation reflects expected growth recovery. It may not be overvalued if earnings improve in the coming quarters.
Brokerages have set varied targets, mostly ranging from ₹1,400 to ₹1,600. Final targets depend on revenue growth and deal execution in H2.
As of now, Tech Mahindra has not changed its official name. It continues to operate under the same brand identity.
Yes, Tech Mahindra is profitable with steady improvement in margins and a 34% rise in Q1 profit. The business is showing signs of recovery.
Discalimer
This content is for informational purposes only and not financial advice. Always conduct your research.