Tech Mahindra Reports Steady Q4 Growth with $1.6 Billion Revenue
Indian IT services giant Tech Mahindra has announced its financial results for the March quarter, revealing a revenue of $1.6 billion. This represents a sequential increase of 0.9% and a year-on-year growth of 4.9%. When measured in constant currency terms, the revenue rose by 0.6% quarter-over-quarter and 2.4% compared to the same period last year.
Full-Year Performance and Macro Challenges
For the entire fiscal year 2026, Tech Mahindra's revenue reached $6.3 billion, marking a growth of 1.9% in dollar terms and 0.6% in constant currency. The company acknowledged that this moderate growth was influenced by several external factors, including macroeconomic uncertainty, supply chain disruptions, and a pullback in discretionary spending that collectively weighed on demand across the industry.
Manufacturing Leads Growth with Strong Sectoral Performance
During the earnings call on Wednesday, CEO Mohit Joshi highlighted that growth in the quarter was primarily driven by the manufacturing sector. He noted strong performances in retail & consumer packaged goods (CPG), particularly in the Americas, which posted robust double-digit gains. Additionally, the company's Comviva product business contributed significantly to the positive results.
Joshi emphasized that deal momentum remains robust across various sectors, with telecom and manufacturing standing out as key areas of strength. Importantly, he stated that there has been no meaningful change in deal tenures, addressing industry concerns about potential shortening of contracts.
AI as a Growth Catalyst Rather Than Deflationary Force
On the topic of artificial intelligence, Joshi provided an optimistic outlook, stating that AI is increasingly serving as an enabler for new deal wins and monetization opportunities rather than acting purely as a deflationary force. He explained that over time, pricing models will increasingly incorporate AI-led components, reflecting the technology's growing role in service delivery.
Significant Margin Expansion and Future Targets
Tech Mahindra reported an EBIT margin of 13.8% for the March quarter, representing a 70 basis points improvement sequentially and a substantial 330 basis points expansion year-on-year. For the full fiscal year, the EBIT margin improved to 12.6%, marking a 290-basis point increase.
The company reiterated its confidence in achieving a 15% operating margin target, which would represent a sharp improvement from the 6.4% exit margin when its transformation plan initially began. "We are very focused on delivering the 15% margin. Once that goal is achieved, we will outline the next phase," Joshi affirmed during the call.
Drivers of Margin Improvement and Strategic Shifts
CFO Rohit Anand detailed that margin gains are being driven by several strategic initiatives:
- Portfolio reshaping toward higher-value services
- Operational efficiencies across the organization
- A shift toward priority service lines like enterprise applications, consulting, and data services
Anand noted that these gains have been largely organic, with the company remaining open to smaller "tuck-in" acquisitions rather than pursuing large deals. "As we grow faster, that gives us operating leverage," he explained, highlighting the company's disciplined approach to expansion.
Sectoral Expansion and Deal Pipeline Strength
Beyond manufacturing and telecom, Tech Mahindra continues to expand its presence in several key sectors:
- Banking, Financial Services and Insurance (BFSI) with particular traction in payments, wealth management, and insurance platforms
- Healthcare services and solutions
- Retail across multiple geographies
Joshi emphasized that "our deal pipeline remains very strong across multiple sectors," reinforcing the company's positive outlook despite broader industry challenges.
Workforce Strategy and AI-Led Productivity Transformation
On the hiring front, Anand revealed that fresher intake was front-loaded in fiscal year 2025 but slowed in FY26 due to shifting demand patterns. "As we get into next year, we will resume hiring, but it will be calibrated—not at the levels of the first year, but higher than what we did last year," he stated.
Joshi added important context about how AI-led productivity is reshaping workforce needs. He explained that if the company can deliver fixed-price projects more efficiently through AI, it "unlocks talent capacity that can be deployed elsewhere." This approach is leading toward what he described as "service tokens"—a model where clients pay for outcomes delivered by a combination of human and digital labor, rather than just effort-based pricing.
Amid these strategic shifts, Tech Mahindra's IT services headcount declined by 5,232 employees during the January-March quarter, reflecting the ongoing transformation in how the company deploys its workforce in an increasingly AI-driven landscape.
