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Tech Mahindra Ltd embarked on a turnaround journey two years ago under the leadership of CEO Mohit Joshi, who was appointed in 2023. Cut to FY27 and it is gearing up to meet a crucial milestone: delivering revenue growth above its peers and achieving the last leg of margin improvement.
Tech Mahindra has formally concluded the stabilization phase and is pivoting toward an execution-led acceleration phase focused on high-margin growth, management said in the March quarter (Q4FY26) earnings call. This confidence is backed by transformation efforts undertaken in FY26, which led to revenue growth turning positive, sharp margin expansion, and record deal wins.
Integrating portfolio companies, scaling crucial accounts, hiring senior leaders and expanding high-margin service lines have buoyed Tech Mahindra earnings, and should yield meaningful results ahead. Constant-currency (CC) revenue grew 0.6% sequentially in Q4FY26, beating consensus estimates. The BFSI, technology media & entertainment, and communications verticals drove growth, but retail & healthcare was a sore point. Profit after tax was hurt by higher forex loss. Over FY26, Tech Mahindra’s CC revenue grew 0.6%.
Deal wins were strong, with Q4FY26 marking the second straight quarter where total contract value (TCV) exceeded $1 billion. Tech Mahindra bagged a European telecom mega deal in Q3 and another mega deal—a global partnership with Orange Business—in Q4. Consequently, TCV for deal wins rose around 42% year-on-year to $3.8 billion in FY26, its highest ever, which provides growth visibility.
Earnings before interest and tax (Ebit) margin increased around 70 basis points (bps) sequentially to 13.8% in Q4FY26, marking the 10th consecutive quarter of expansion. Margin improvement was aided by operating efficiencies under Project Fortius, currency tailwinds, and Comviva seasonality, but the benefit was partially offset by continued AI investments and large-deal transition costs. FY26 Ebit margin rose 290 bps, aided by strong cost efficiencies despite flat revenue growth.
But Tech Mahindra needs more margin levers besides cost control from here on. Management reiterated its FY27 margin target of 15% and indicated that expansion is “not too dependent on growth”. Most of the improvement is expected from gross margin, delivery efficiencies and fixed-price contracts which are margin-accretive. But the prevailing macroeconomic uncertainty is a hindrance.
“TechM’s strong deal wins in FY26 positions it well to catch up with (or even beat) large-cap peers on growth in FY27. We still remain sceptical of its 15% margin target in FY27 (we are assuming 14.5%),” said Nuvama Research. Tech Mahindra management sees industry growth around 2-5% and aims to outperform it. Here, timely deal conversions and stability of client budgets are key factors to monitor. “We believe the restructuring exercise has largely calibrated margins to a comfort band, now it requires paddling more on the revenue conversions,” said PL Capital. Tech Mahindra plans to unveil a new three-year FY30 vision once FY27 targets are met.
Meanwhile, HCL Technologies' dismal Q4FY26 results has further soured sentiment across IT stocks, leading to a sharp drop in share prices on Tuesday. Concerns of AI-led deflation and demand uncertainty have dampened hopes of a recovery in FY27.
This meant the positives of Tech Mahindra’s earnings were overshadowed, and the stock fell over 2% on Thursday. It currently trades at 17 times estimated FY28 earnings, according to Bloomberg data. This is largely in-line with or a slight premium to its peers. If Tech Mahindra manages to hit its margin target, there is scope for a re-rating.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.