Tech Mahindra Ltd — Q1 FY27 earnings call
Summary generated by AI from the official transcript Tech Mahindra Ltd filed with BSE on 22 Jul 2026. Every statement cites a verbatim quote from that document — open any citation to read it. This is a record of what management said, not a recommendation. How we check these summaries
The short read
Tech Mahindra reported Q1 FY27 revenue of US$1.66 billion, up 6.1% year-on-year on a reported basis and 6.6% in constant currency, with growth broad-based across all verticals. Operating margin came in at 14.4%, up 60 basis points quarter-on-quarter and 330 basis points year-on-year, aided by volume growth and Project Fortius savings. The company also reported total deal wins of US$1.078 billion, profit after tax of US$154 million, and free cash flow of US$167 million during the quarter.
Numbers mentioned
Revenue: US$1.66 billion (Q1 FY27)
p. 3
“For the quarter, we reported revenues of US$1.66 billion, representing a 6.1% year-on-year growth on a reported basis and 6.6% growth in constant currency.”
Mohit Joshi, page 3 of the filed PDF · View the filing
Operating margin: 14.4% (Q1 FY27)
p. 3
“Operating margins stood at 14.4%, reflecting sustained execution discipline, operational rigor, and a continuous focus on profitable growth.”
Mohit Joshi, page 3 of the filed PDF · View the filing
Total deal wins: US$1.078 billion (Q1 FY27)
p. 6
“Moving to deal momentum, we delivered total deal wins of US$1.078 billion.”
Mohit Joshi, page 6 of the filed PDF · View the filing
Revenue in INR: INR15,712 crores (Q1 FY27)
p. 10
“From an INR perspective, revenues stood at INR15,712 crores, growing 4.2% Q-o-Q and 17.7% on a Y-o-Y basis.”
Rohit Anand, page 10 of the filed PDF · View the filing
EBIT margin: 14.4% (Q1 FY27)
p. 10
“EBIT margins for the quarter were at US$238 million with EBIT percent at 14.4%, up 60 bps Q-o-Q and 330 basis points Y-o-Y.”
Rohit Anand, page 10 of the filed PDF · View the filing
Profit after tax: US$154 million (Q1 FY27)
p. 10
“Profit after tax for the quarter was US$154 million, a year-on-year increase of 16.2%.”
Rohit Anand, page 10 of the filed PDF · View the filing
PAT margin: 9.3% (Q1 FY27)
p. 10
“In INR terms, profit after tax is INR1,465 crores with a PAT margin of 9.3% and an expansion of 80 basis points on a Y-o-Y basis.”
Rohit Anand, page 10 of the filed PDF · View the filing
Effective tax rate: 27.2% (Q1 FY27)
p. 10
“Our effective tax rate for the quarter came in at 27.2%.”
Rohit Anand, page 10 of the filed PDF · View the filing
Free cash flow: US$167 million (Q1 FY27)
p. 10
“We generated US$167 million of free cash flow during the quarter, up 94% on a Y-o-Y basis.”
Rohit Anand, page 10 of the filed PDF · View the filing
DSO: 84 days (Q1 FY27)
p. 10
“Higher collection efficiency supported the DSO improvement to 84 days, a reduction of five days on a quarter-on-quarter basis.”
Rohit Anand, page 10 of the filed PDF · View the filing
Return on capital employed: 28.3% (Q1 FY27)
p. 10
“Our return on capital employed stood at 28.3% for the quarter, reflecting a sequential improvement of 210 basis points.”
Rohit Anand, page 10 of the filed PDF · View the filing
Hedge book: US$0.72 billion (as of June 30)
p. 10
“Our hedge book as of June 30th stands at US$0.72 billion.”
Rohit Anand, page 10 of the filed PDF · View the filing
Communications vertical growth: 1.3% year-on-year (Q1 FY27)
p. 3
“In our communications business, we grew by 1.3% year-on-year.”
Mohit Joshi, page 3 of the filed PDF · View the filing
BFSI vertical growth: 8.1% year-on-year (Q1 FY27)
p. 4
“Our BFSI business grew 8.1% year-on-year.”
Mohit Joshi, page 4 of the filed PDF · View the filing
Manufacturing vertical growth: 17.2% year-on-year (Q1 FY27)
p. 4
“Manufacturing grew 17.2% year-on-year.”
Mohit Joshi, page 4 of the filed PDF · View the filing
Retail, travel and logistics growth: 8.6% year-on-year (Q1 FY27)
p. 4
“Retail, travel, and logistics grew 8.6% year-on-year, supported by momentum across e-commerce expansion, logistics modernization, automation, warehousing, and last-mile delivery optimization.”
Mohit Joshi, page 4 of the filed PDF · View the filing
Healthcare vertical growth: 7.2% year-on-year (Q1 FY27)
p. 4
“Our healthcare business grew 7.2% year-on-year, supported by momentum across providers and life sciences.”
Mohit Joshi, page 4 of the filed PDF · View the filing
What management said it would do
A record of statements made on the call, in the words management used. Parakho does not forecast, endorse or assess them, and their presence here is not a view on whether they will happen.
Operating margin — 15% · FY27
stated as an aspiration by Rohit Anand
p. 10
“the momentum we've built across growth, deal wins, client engagement, and profitability gives us confidence that we are well-positioned to deliver on our FY 27 ambition of achieving above average of the peer growth and an operating margin of 15%.”
Rohit Anand, page 10 of the filed PDF · View the filing
Revenue growth vs peer average — above peer average · FY27
stated conditionally by Mohit Joshi
p. 11
“barring any sort of unexpected and so far unforeseen macroeconomic developments, we remain confident that the growth momentum that we have set in the first quarter of the year will continue for the remainder of the year and that we will, you know, we will meet or exceed our goal of being ahead of peer average for the full financial year”
Mohit Joshi, page 11 of the filed PDF · View the filing
Exit margin — upwards of 15% · fourth quarter
stated as an aspiration by Rohit Anand
p. 12
“We've not articulated that, but I mean if you look at Q1, we're at 14.4%, and as we move forward incrementally, as I mentioned, we'll keep on improving margins, so it has to be upwards of 15% for the fourth quarter, and we'll see how each quarter progresses from here and now.”
Rohit Anand, page 12 of the filed PDF · View the filing
European auto business impact — 1% to 1.3% range · next quarter
stated firmly by Rohit Anand
p. 13
“I would say around a 1% to 1.3% range would be the impact coming into the next quarter.”
Rohit Anand, page 13 of the filed PDF · View the filing
Wage increases — Q2
stated firmly by Mohit Joshi
p. 17
“As far as the wage piece is concerned, we expect to be able to announce it effective Q2, obviously in a phased fashion which we will be announcing, to our employees in the days to come, so that will be effective, it'll start becoming effective Q2 in a phased fashion.”
Mohit Joshi, page 17 of the filed PDF · View the filing
Comms and manufacturing vertical growth — remainder of the year
stated conditionally by Mohit Joshi
p. 17
“So I remain optimistic about both comms and manufacturing growing through the remainder of the year, barring obviously any unforeseen surprises.”
Mohit Joshi, page 17 of the filed PDF · View the filing
DSO and free cash flow — coming quarters
stated conditionally by Rohit Anand
p. 12
“you'll see some normalization come through as you move forward, but as a focus area, and I'd articulated it earlier also, you know, just the working capital strategy is very important for us and we will continue to make sure on a long-term basis we'll keep on improving, though quarterly seasonality you'll see.”
Rohit Anand, page 12 of the filed PDF · View the filing
Onsite-offshore mix
stated conditionally by Rohit Anand
p. 19
“I think the trend will continue as we build in more maturity stage of execution of these deals, we'll see a reduction, but not in this year.”
Rohit Anand, page 19 of the filed PDF · View the filing
Q&A highlights
Management's answers to analyst questions, in Parakho's words rather than a transcript. Each row names who answered and carries the verbatim quote it was drawn from.
Management expects continued ramp-up of large deals to be a tailwind, though a one-off European auto acceleration will create a headwind in Q2.
Answered by Mohit Joshi
Asked by Kumar Rakesh: Will growth momentum continue into Q2 without Comviva seasonality drag?
p. 11
“The one sort of headwind that we will have is the fact that we had a one-off in our European auto business in this quarter, which will show some signs of slowdown then in Q2.”
Mohit Joshi, page 11 of the filed PDF · View the filing
Management said margin improvement will be a mix of gross margin actions under Project Fortius and continued SG&A benefits from portfolio company consolidation.
Answered by Rohit Anand
Asked by Kumar Rakesh: How much gross margin lever remains and what exit margin is targeted?
p. 11
“We will continue to drive gross margin on all the actions that we're delivering on Project Fortius, from fixed price productivity to more utilization from a T&M perspective, as well as continued SG&A benefit on portfolio company consolidation.”
Rohit Anand, page 11 of the filed PDF · View the filing
One deal has not started ramping up at all and will impact subsequent quarters, while Comviva seasonality and a cloud consumption sourcing change were the two Q1 headwinds.
Answered by Mohit Joshi
Asked by Sudhir: What part of the ramp-up from the two large Comms deals has occurred already, and how will it flow through?
p. 12
“Look, I think one of these deals will only start to ramp up, has not ramped up in Q1 at all, so we will see the impact in subsequent quarters only.”
Mohit Joshi, page 12 of the filed PDF · View the filing
Management said the quarter was stronger than expected due to accelerated European auto delivery, and characterized overall demand as shifting but not catastrophic.
Answered by Mohit Joshi
Asked by Ankur Rudra: Was the strong Q1 performance a surprise, and is growth driven by demand recovery or share gains?
p. 14
“So I would feel that the demand situation is not catastrophic. Clearly, there is a ton of competition out and our competition at times is doing irrational things, but aside from that we remain as they would say cautiously optimistic about the demand environment for the rest of the year and our ability to execute.”
Mohit Joshi, page 14 of the filed PDF · View the filing
Management reaffirmed comfort with the 15% target for the year and cited aggressive productivity commitments and price-holding on inflating infrastructure costs as examples of competitor irrationality.
Answered by Mohit Joshi
Asked by Kawaljeet Saluja: Does the earlier assessment of pricing comparability to peers, implying potential high-teens margins, still hold, and what examples of competitor irrationality can be shared?
p. 16
“I think one example is obviously the level of productivity baked into, 5 to 7 year deals. Now, obviously, we want to make sure that we are aggressive, but getting into a 70%, 80% productivity benefit over a 5-year deal, I feel is getting into productivity benefits that are not visible today without very significant process or system changes by the client, so that is where we would hold back.”
Mohit Joshi, page 16 of the filed PDF · View the filing
Management said both verticals should keep growing, wage hikes will be effective Q2 in phased fashion, and there is no unusual level of client delays or cancellations.
Answered by Mohit Joshi
Asked by Nitin Padmanabhan: Will comms and manufacturing grow in the next quarter, when will wage increases happen, and are there signs of ramp-up delays due to macro?
p. 18
“But candidly, it's not very different from what I used to see, in my 25-plus years in this industry. So I would say I'm not seeing an outsized or a very large level of client delays or cancellations”
Mohit Joshi, page 18 of the filed PDF · View the filing
Management attributed the decline to AI-driven productivity gains in fixed price engagements and expects hiring to resume as revenue growth continues.
Answered by Mohit Joshi
Asked by Surendra Goyal: Is IT services headcount, down 7% year-over-year, expected to keep declining?
p. 18
“I believe we're running a healthy utilization, but we also see a good, trajectory for revenue growth for the remainder of the year, and I assume that that will mean hiring in the remainder of the year absolutely, which will be a mix of fresh talent and experienced talent”
Mohit Joshi, page 18 of the filed PDF · View the filing
Management said it will stay competitive on deals but flagged that upcoming wage costs and AI-related productivity pressures mean the 15% margin target is not guaranteed and discipline continues.
Answered by Mohit Joshi
Asked by Sandeep Shah: With deal TCV above $1 billion for a third consecutive quarter, is there upward scope given reduced margin pressure?
p. 19
“we still have to deliver the 15% margin, right? So we're not taking that for granted and losing our discipline on large deals and on profitable growth.”
Mohit Joshi, page 19 of the filed PDF · View the filing
Management said the picture is nuanced, with some auto cutback pressures easing while aerospace shows increased demand, resulting in overall resilience.
Answered by Mohit Joshi
Asked by Vibhor Singhal: Is Tech Mahindra seeing weakness in the auto segment like peers have reported, given manufacturing strength?
p. 20
“We are not certainly seeing the same level of stress that some of our other competitors have called out. There is some pressure certainly, there is a huge ask of productivity, but in some cases, this has also meant consolidation opportunities.”
Mohit Joshi, page 20 of the filed PDF · View the filing
Risks flagged
One-off acceleration in European auto delivery will create a slowdown headwind in the next quarter
p. 11
“The one sort of headwind that we will have is the fact that we had a one-off in our European auto business in this quarter, which will show some signs of slowdown then in Q2.”
Mohit Joshi, page 11 of the filed PDF · View the filing
Volatility in a large US telecoms client
p. 12
“There is clearly volatility in a large US telecoms client, but despite that, we remain optimistic about Comms being a growth driver for us for the remainder of the year.”
Mohit Joshi, page 12 of the filed PDF · View the filing
Cloud consumption revenue being sourced directly by client after acquisition, reducing Comms revenue
p. 12
“the case of, you know, of a client where cloud consumption was being routed through us as part of a larger deal, and as part of their takeover by a larger tech company, that cloud consumption is now being sourced directly, right?”
Mohit Joshi, page 12 of the filed PDF · View the filing
Weakening demand in certain legacy service areas
p. 14
“Areas where we are seeing challenges to demand are sort of as you would expect in the manual testing area in your traditional big data area, in standalone e-commerce, in legacy CRM and legacy infra admin.”
Mohit Joshi, page 14 of the filed PDF · View the filing
Intense industry competition with irrational pricing practices by rivals
p. 14
“Clearly, there is a ton of competition out and our competition at times is doing irrational things, but aside from that we remain as they would say cautiously optimistic about the demand environment for the rest of the year and our ability to execute.”
Mohit Joshi, page 14 of the filed PDF · View the filing
Rising memory and chip prices creating cost pressure on multi-year deal pricing
p. 17
“As you know, memory prices and chip prices are increasing significantly, and we are not willing to guarantee those for the customer, right?”
Mohit Joshi, page 17 of the filed PDF · View the filing
Upcoming wage increases and AI-related productivity pressures could weigh on margin delivery
p. 19
“I'm also mindful of the fact that we have the wage bill coming up in this quarter, we will certainly have, some productivity pressures from an AI perspective, and we still have to deliver the 15% margin, right?”
Mohit Joshi, page 19 of the filed PDF · View the filing
Technology, media and entertainment vertical decline due to client spend volatility
p. 9
“Technology, media, and entertainment declined 1.7% Q-o-Q on account of continued volatility in the client spend.”
Rohit Anand, page 9 of the filed PDF · View the filing
Weakness in auto segment spend and cost reduction pressure from clients
p. 20
“In auto, customers are looking for AI for cost reduction, they're looking for faster turnaround of system changes, which is a little bit of a downer.”
Mohit Joshi, page 20 of the filed PDF · View the filing
Generated by claude-sonnet-5. Source: the transcript as filed with BSE. We link to the exchange's copy; we do not host transcripts. Parakho is a data and screening tool, not an investment adviser — nothing here is a recommendation to buy, sell or hold.