Tech Mahindra is a leading global IT services and consulting company, part of the Mahindra Group. It has strong positioning in communications, enterprise IT, network services, BPS, and digital transformation. The company is also known for sustainability leadership and has been recognized globally for ESG performance. Let’s dive into Tech Mahindra Q3 FY26 Concall.
Management Commentary (Key Messages)
CEO Mohit Joshi called Q3 a “strong performance”, highlighting:
- Highest quarterly deal bookings
- Best LTM deal wins in 5 years
- A $500M+ Europe mega deal, with revenue expected from H1 FY27
CFO Rohit Anand emphasized:
- 9th consecutive quarter of margin expansion
- The calendar year begins on a “positive note”
Overall tone: high confidence, especially on large-client growth, AI scaling, pricing discipline, and partnerships.
Financial Snapshot (Q3 FY26)
- Revenue: $1,610M (+1.7% QoQ CC)
- Operating Margin (EBIT): 13.1% (+100 bps QoQ, +290 bps YoY)
- PAT Margin: 9.2% (pre-exceptionals)
- ROCE: 26.9%
- FCF: $194M
- DSO: improved by 4 days
- Forex: $13.9M loss
What Changed This Quarter?
✅ GOOD (Positive Highlights)
- Record deal momentum: $1.1B TCV, strongest in years
- Large client engine strong: $20M+ clients outperforming overall growth
- 3 new $50M+ clients added YoY
- 9 straight quarters of margin expansion
- Execution confidence rising: deal pipeline + delivery strength improving
❌ BAD (Negatives)
- BFSI decline due to furloughs + productivity pass-throughs
- Forex loss $13.9M
- Manufacturing softness near-term (after Europe auto ramp impact)
📈 IMPROVING (What is Getting Better)
- AI moving from pilots → production scale
- Google Gemini partnership
- Dallas Makers Lab
- Project 40 improving margins
- utilization improvement
- automation + fixed price productivity
- Operating discipline: strong pricing + mix improvement
- Better cash conversion: DSO down 4 days, FCF solid
📉 WORSENING / RISKS
- High-Tech remains volatile (cost pressures)
- US Auto “wait & watch” environment persists
- Manufacturing may stay soft in the near term
- $30M provision due to new wage code impact (cost headwind)
Outlook & Guidance (What Mgmt Said Next)
Tech Mahindra reaffirmed FY27 goals:
- Grow faster than peers
- Achieve 15% EBIT margin
Key visibility points:
- Europe mega deal revenue expected from H1 FY27
- Tech spend environment: improving overall
- Communications expected to be a key 2027 growth driver
- BFSI stable once furlough base effect normalizes
Macro & Sector View
- Tech spending visibility: better than before
- High-tech cautious
- Auto cautious / delayed decision-making
- BFSI: concerns around credit card rate caps, but exposure limited per management
Competitive Positioning (Why TechM May Win)
- Strong ESG + positioning: #1 globally in TSV IT services (S&P DJSI)
- Growth outperformance: +1.7% above peers organic CC growth
- Unique strength in Communications:
- IT + Networks + BPS + Comviva software
- Brand refresh: future-ready transformation partner
Key Growth Drivers Going Ahead
- 1) Large clients ($20M+) as core strength
- 2) AI scaling and partnerships → monetization phase
- 3) Project 40 margin improvement engine
- 4) Fixed-price execution (>50% revenue) enabling productivity
- 5) Rail acquisition synergy benefits
- 6) Manufacturing + RTL (Retail/Travel/Logistics) showing momentum (11.7% YoY)
Analyst Takeaway / Final Verdict
Tech Mahindra delivered a turnaround-style quarter, driven by:
- record deal wins ($1.1B TCV)
- 9 straight quarters of margin expansion
- improving execution confidence
If the mega deal ramps cleanly and AI scales beyond pilots, TechM looks well-placed to outpace peers and move towards 15% EBIT margin by FY27.
Verdict Card (Investor-Friendly)
Result: ✅ Strong
Growth: ✅ Improving
Margins: ✅ Strong uptrend (13.1%)
Deals: ✅ Record best in 5 years
Risk: ⚠️ High-tech volatility + manufacturing softness
Overall: TechM turnaround strengthening
FAQ (Tech Mahindra Q3 FY26 Concall)
1) What were Tech Mahindra’s deal wins in Q3 FY26?
Tech Mahindra reported $1.1B total contract value (TCV), its strongest deal momentum in 5 years.
2) What is Tech Mahindra’s EBIT margin in Q3 FY26?
EBIT margin came at 13.1%, up +100 bps QoQ and +290 bps YoY.
3) Is Tech Mahindra confident about FY27 guidance?
Yes. Management reaffirmed the target to grow faster than peers and reach 15% EBIT margin by FY27.
4) When will the Europe mega-deal contribute to revenue?
Revenue contribution is expected from H1 FY27.
5) What are the biggest risks mentioned in the call?
High-tech demand volatility, manufacturing softness, and near-term auto cautiousness.
