TechM Q2 FY26: Margin Expansion and Robust Deals Power Growth

Global digital transformation leader Tech Mahindra, a part of the Mahindra Group, has unveiled its consolidated financial results for the second quarter of the fiscal year 2025-26, painting a picture of resilient operational execution and a confident outlook for the future. While the consolidated net profit saw a modest year-on-year (YoY) decline, primarily due to the absence of a one-time gain reported in the previous year, the sequential growth and robust operational metrics highlight a company effectively navigating a challenging global demand environment.

The key takeaway from the Q2 FY26 earnings is the impressive operational efficiency and margin expansion, which underscore the strength of the company’s strategic turnaround plan.

Financial and Operational Highlights: Margin Expansion Takes Center Stage

Tech Mahindra reported consolidated revenue from operations at ₹13,995 crore, marking a 5.1% increase year-on-year and a sequential growth of 4.8% from the preceding quarter. This top-line momentum signals a positive inflection point after a period of general industry-wide softness.

The quarter’s standout achievement was the notable improvement in profitability. The Earnings Before Interest and Taxes (EBIT) stood at ₹1,699 crore, surging 15% quarter-on-quarter and an impressive 32.7% year-on-year. This led to the EBIT margin expanding significantly to 12.1%, a sequential improvement of 108 basis points (bps) and the eighth consecutive quarter of margin expansion, which the management attributes to disciplined execution and operational efficiencies.

Consolidated Profit After Tax (PAT) for the quarter was reported at ₹1,195 crore. Although this represented a 4.4% YoY dip—largely due to a non-recurring exceptional gain from a land sale in the year-ago quarter—the PAT grew 4.7% sequentially, demonstrating consistent operational advancement.

Strategic Deal Wins and Broad-Based Growth

The company maintained a healthy trajectory in new business acquisition. The total contract value (TCV) for new deal wins was strong at $816 million. Furthermore, the Last Twelve Months (LTM) deal TCV has seen a remarkable increase of 57% YoY, a testament to Tech Mahindra’s ability to convert pipeline into profitable business.

Commenting on the performance, Mohit Joshi, CEO and Managing Director, Tech Mahindra, emphasised the broad-based nature of the growth, stating, “We delivered broad-based growth this quarter, reflecting the strength of our strategy and execution.” He also highlighted the firm’s focus on future-ready technologies, adding, “We launched TechM Orion, our next-generation AI platform, and TechM Orion Marketplace to help enterprise accelerate autonomous transformation.”

Growth was particularly robust in segments like Banking, Financial Services & Insurance (BFSI) and Manufacturing, which showed stability and improved spending. While the core Communications vertical, which contributes a significant portion of the revenue, faced some industry-specific headwinds, it showed signs of stability, with the largest clients delivering above the company average growth.

A Confident View on the Road Ahead

Rohit Anand, Chief Financial Officer, reinforced the narrative of disciplined execution: “This quarter marks the eighth consecutive period of margin expansion, driven by operational efficiency and disciplined execution. Our deal TCV is up 57% year-on-year on LTM basis, supported by strong deal conversions.”

The management’s commentary suggests a cautious but confident outlook. Despite acknowledging the continued fragility of the global macro environment, the company expects the second half of FY26 to show stronger sequential growth, moving beyond the current stabilisation phase. Tech Mahindra is steadily progressing towards its ambitious FY27 EBIT margin target of 15%, driven by its ‘Project Fortius’ efficiency programme.

In a move reflecting confidence in its cash flow and future prospects, the Board of Directors also declared an interim dividend of ₹15 per equity share for the financial year 2025-26.

Tech Mahindra’s Q2 FY26 results strongly indicate that its focus on operational excellence, coupled with strategic investments in next-generation technologies like AI, is paying dividends. The company appears well-positioned to leverage its strong deal pipeline and improved efficiency to drive sustainable, profitable growth, cementing its relevance in a quickly evolving global IT landscape.