Tech Mahindra Q3 Results: Profit misses poll, revenue and margins beat estimates

IT services company Tech Mahindra Ltd on Friday (January 16) reported a net profit of ₹1,122 crore in Q3, compared with the CNBC-TV18 poll estimate of ₹1,385 crore. Revenue for the quarter stood at ₹14,393 crore, higher than the poll estimate of ₹14,209 crore.

EBIT (Earnings Before Interest and Taxes) came in at ₹1,891.6 crore versus the poll estimate of ₹1,804 crore, while the operating margin was at 13.1%, above the estimated 12.7%. Dollar revenue for the quarter was $1,610 million, compared with the CNBC-TV18 poll of $1,593 million.

On a year-on-year basis, net profit declined 6% to ₹1,122 crore from ₹1,194.5 crore. Revenue rose 2.8% to ₹14,393 crore from ₹13,995 crore. EBIT increased 11.3% to ₹1,891.6 crore from ₹1,699 crore, while margins improved to 13.1% from 12.1% a year ago.

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Dollar revenue grew 1.5% to $1,610 million from $1,586 million, while constant currency revenue growth stood at 1.7%, higher than the CNBC-TV18 poll estimate of 0.60%.

Tech Mahindra reported free cash flow of $194 million in Q3. New deal wins during the quarter stood at a total contract value of $1,096 million, registering a growth of 47.0% year-on-year and 34.3% quarter-on-quarter.

Diluted earnings per share for the quarter came in at ₹12.64. Total headcount stood at 149,616 at the end of the quarter, reflecting a reduction of 872 employees on a year-on-year basis.

LTM IT attrition was reported at 12.3%. Operational metrics showed days of sales outstanding at 90 days. Cash and cash equivalents at the end of the quarter stood at ₹7,666 crore.

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Mohit Joshi, CEO and Managing Director, Tech Mahindra, said, "Our deal wins on an LTM basis are the highest we have achieved in the past five years, reflecting an improved deal-win run-rate over the past several quarters.

The momentum is a testament to our sustained investments in sales, solution-oriented go-to-market approach and the growing relevance of our AI-led offerings in addressing client needs. Together, these efforts are laying a strong foundation for long-term value creation"

Rohit Anand, Chief Financial Officer, Tech Mahindra, said, "This quarter reflects a well-rounded financial performance, marked by the ninth consecutive quarter of margin expansion and continued strength in cash generation.

A sustained focus on working capital discipline has led to improved cash flows and a meaningful improvement in DSO, driven by consistent execution. We remain on track in our progress toward our FY27 goals."

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Shares of Tech Mahindra Ltd ended at ₹1,670.55, up by ₹82.05, or 5.17%, on the BSE.