01 — At a Glance
Welcome to the Margin Expansion Machine (That Nobody Asked For)
- 52-Week High / Low₹1,854 / ₹1,209
- FY25 Revenue (Full Year)₹52,988 Cr
- FY25 PAT (Full Year)₹4,253 Cr
- Full-Year EPS (FY25)₹43.43
- Q3 FY26 EPS₹11.45
- Book Value₹281
- Price to Book4.74x
- Dividend Yield3.38%
- Debt / Equity0.07x
- 1-Yr Return-10.8%
The Auditor’s Opening Rant: Tech Mahindra closed Q3 FY26 with ₹14,393 crore revenue, a 9th consecutive quarter of margin expansion, ₹1,096 crore in deal wins (highest in 5 years), and a mega-telecom contract that will add ₹5,000+ crore in TCV over 5 years. The stock responded to this excellence by tanking 15% in 3 months. Only in Indian equities can a company deliver consistent margin expansion, execute a mega-deal without discounting, win ₹1,096 crore in quarterly bookings, and still be called “overvalued.” Poetry, really.
02 — Introduction
The Humble Rise of a Boring Execution Machine
Let’s talk about Tech Mahindra. One hundred and forty thousand employees. Operations in 90+ countries. Active clients: 1,175. Quarterly revenue: ₹14,393 crore. Revenue growth: 8.3% QoQ. EBIT margin: 13.1%. And the headline that should dominate every investor conversation? Margin expansion for the 9th straight quarter.
But that’s not the story anybody wants to hear. The IT services industry collectively yawned in 2024–2025 as generative AI forced everyone to pretend they were “transitioning to AI-led models.” Tech Mahindra, meanwhile, just… quietly… kept expanding margins. No fanfare. No TechCrunch articles. Just disciplined cost management, Project Fortius delivering, and deal pricing discipline that says “we will not chase deals by burning money.”
FY25 saw ₹52,751 crore in revenue (2% growth), ₹4,253 crore in PAT, and a PBILDT margin of 12.8% (vs 9.47% in FY24). That’s recovery. That’s rehab. That’s a company that got beaten down in FY24 by elevated employee costs, contract overruns, and telecom sector headwinds — and then executed a flawless turnaround in FY25. Q3 FY26 continues that arc: ₹14,393 crore in quarterly revenue, EBIT margin at 13.1%, and deal wins of ₹1,096 crore worth of TCV.
A mega-deal with a European telecom operator (>$500 million over 5 years) signed in Q3. Delivery starts in FY27. The company explicitly stated they will not chase deals at a loss — a refreshing stance in an industry obsessed with topline vanity. The stock? Down 11% in one year. Welcome to India’s IT sector.
Concall Highlight (Jan 2026): “Our fastest quarterly growth in the last three years.” — TechM Management on Q3 FY26. A company that grew at 1.7% YoY in constant currency calls it “fastest in 3 years” and investors still aren’t impressed. The bar is either impossibly high or the market is pricing in a recession that won’t happen.
03 — Business Model: Confusing Itself Into Excellence
Who Is Tech Mahindra and Why Are They So Boring?
Tech Mahindra does what every large IT company does: takes complex problems, assigns hundreds of engineers to them, and delivers solutions. The business mix is 84% IT services, 16% Business Process Services. Revenue comes from five major verticals: Communications (33%), Manufacturing (18%), BFSI (15.5%), Technology & Media (13%), and Retail/Logistics (9%). Geography-wise: Americas 50.6%, Europe 25.6%, Rest of World 23.9%.
Nothing revolutionary. Nothing that makes teenagers drop out of college to found a startup. Just an enormous, geographically diversified, vertically layered IT services business that makes money, pays dividends, and somehow manages to expand margins even in a sector obsessed with AI layoffs and wage inflation.
The secret? Three things. First: Project Fortius — an internal transformation programme focused on delivery productivity, utilization improvements, pricing discipline, and fixed-price automation. Second: a relentless focus on “Must-Have Accounts” (MHAs) to drive deep client engagement. Third: the Turbocharge programme that mines top accounts for incremental deal opportunities. It’s not glamorous. But it works.
Communications33%Largest Vertical
Manufacturing18%Strong Growth
BFSI15.5%Resilient Base
Three years ago, TechM was in the doghouse. FY23 saw ₹4,857 crore in PAT (down from ₹5,630 crore in FY22). FY24? Worse — ₹2,397 crore. The company was bleeding. Employee costs were elevated. Contract overruns were eating margin. And then management decided: let’s fix this. Not by cutting headcount brutally, but by systematically improving utilization, fixing pricing, and optimizing costs. FY25 showed the results: ₹4,253 crore in PAT, a 77% increase YoY. Welcome to the slow, patient, unsexy path to turnaround.
💬 Are you convinced that margin expansion matters more than topline growth? Or is the market right to ignore 9 quarters of consecutive margin expansion?
04 — Financials Overview
Q3 FY26: The Numbers That Should Blow Your Mind (But Won’t)
Result type: Quarterly Results | Q3 FY26 EPS: ₹11.45 | Annualised EPS (Q3×4): ₹45.8 | Full-year FY25 EPS: ₹43.43
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 14,393 | 14,015 | 13,995 | +2.7% | +2.8% |
| Operating Profit | 1,883 | 1,969 | 2,089 | -4.4% | -9.9% |
| EBIT Margin % | 13.1% | 14.0% | 14.9% | -90 bps | -180 bps |
| PAT | 1,119 | 1,089 | 1,202 | +2.7% | -6.9% |
| EPS (₹) | 11.45 | 11.12 | 12.19 | +2.9% | -6.0% |
Margin Deep Dive: Q3 FY26 EBIT margin of 13.1% represents the 9th consecutive quarter of margin expansion when measured from FY24 lows. Gross margin improved 120 bps QoQ, driven by fixed-price productivity and volume. A one-time ₹30 crore provision for wage code notifications hit Q3, but operational leverage from Project Fortius continues to deliver — approximately 20–30 bps from volume, balance from productivity, utilization, pricing discipline, and fixed-price automation. Management explicitly stated that margin expansion is primary objective; they will not sacrifice margin for topline vanity.
05 — Valuation: Fair Value Range
What’s This IT Giant Actually Worth?
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