Why Tech Mahindra’s turnaround is still a distant dream

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Subscribe to enjoy similar stories. Tech Mahindra Ltd’s three-year transformation journey initiated under the leadership of CEO Mohit Joshi is making steady progress. The company is focusing on selective large deals and stringent cost controls to achieve its FY27 targets of a 15% Ebit margin and revenue growth above the industry average.

Over the past three quarters (Q4FY24-Q3FY25), Tech Mahindra has achieved 1.0% constant currency revenue compound quarterly growth rate (CQGR), compared to an average 1.6% decline seen in the preceding four quarters, according to JM Financial Institutional Securities Ltd. During this period, margins expanded by 280 basis points (bps). Read this | Tech Mahindra’s strategy gives hope, but watch out for risks along the way Despite facing currency headwinds and making investments, the December quarter (Q3FY25) Ebit margin improved by 60 bps sequentially to 10.2%, surpassing the consensus estimate of 9.7%, driven by operational efficiencies under Project Fortius.

Additionally, the total contract value of net new deal wins reached $745 million, marking a multi-quarter high and representing the fourth consecutive quarter of sequential growth in deal wins. Among these, three large deals were secured in the communications vertical. It noted that discretionary demand in this segment remains subdued, further deterioration is unlikely.

The company remains optimistic about its deal pipeline and foresees incremental demand improvement in 2025 compared to 2024. However, challenges persist. Wage hikes effective from January 1 may reduce margins by 100-150 bps in Q4.