Tech Mahindra targets 2.5x margin growth by FY27 amid drastic profit decline

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Bajaj Finance, IndusInd Bank, Tech Mahindra among 38 companies to report Q4 earnings on April 25 While Joshi did not delve into the specifics of how the margin target would be achieved, Rohit Anand, Tech Mahindra’s chief financial officer, said the company is planning “cost-saving exercises to stabilize the margin by next year, before growing further by FY27". To be sure, the company’s margin was 6.1% in FY24—the worst among the top six IT services firms. According to Joshi and Anand, Cost-saving initiatives will amount to reducing expenses by $250 million per year to reach its margin target.

The move will also allow Tech Mahindra to make investments in new capabilities, leading to the rise in new revenue-contributing vertical by FY26, Anand said during the post-earnings analyst call. Read also: Q4 Results: Tech Mahindra declares final dividend of ₹28 per equity, fixes record date Additionally, Tech Mahindra has revamped its internal structure, with chief operating officer Atul Soneja coming on board in August 2023. “We are mindful of the fact that we have not delivered predictability of our financials in the past.

We’re now very focused on driving that predictability. There will be volatility through FY25 since we’re in the middle of a turnaround, but everything that we’re doing right now is focused on bringing that volatility down," Joshi said. The company seeks to reduce the number of active clients, and focus on larger deals.

“You want to focus on the most important geographies, verticals and clients. Every organization only has so much energy, and we want to focus it on where we see the most potential. Otherwise, over time, organizations get very complex, and the focus goes away—especially if you look at our focus