← Throughline · holding view Deep analysis ↗ Q4 FY25
TECHM Tech Mahindra Ltd · IT services Q4 FY25 · concall
Pattern: fy26 industry leading growth

Tariff anxiety vanished Q2 onwards.

2 weak · 6 clean — pushback across 2 of 8 Q&A turns

Focused evidence 2 of 8

Sudheer Guntupalli · Kotak Mutual Fundweak

Given 42 percent YoY deal win growth (best vs peers) and high telecom exposure (relatively insulated from tariffs), can TechM achieve better-than-industry-average growth in FY26 itself? On margins, if TechM reaches the 15 percent target faster than baked in, will it be reinvested or flow to P&L?

Mohit said large deal wins will contribute and deliver growth in FY26, but softness in manufacturing/autos and hi-tech since January must be weighed. Telecom isn't impacted by tariffs yet but Telco economics remain stressed and capex spend is low; opportunity will be consolidation-driven (already seeing in Europe and APAC) rather than spend increase. On margins, the three-year plan is based on normal growth coming back; FY26 looks stressed and will have to deliver against headwind. They have a lot they want to invest from a growth perspective and will take that call as it happens, but as of now there are more macro headwinds than tailwinds.

Ankur Rudra · JP Morganweak

Where do you see industry growth heading given the pushes and pulls this year? If normal industry growth doesn't come through in FY26 or FY27, which margin levers to lift margins to 15 percent would be at risk? What level of quarterly or annual deals do you need to get to mid-to-high single digits growth?

Mohit said industry growth expectations have moderated from single digits in November to mid-single digits in January to low single digits now - still a discovery process. TechM focused on winning market share and Project Fortius regardless. Reiterated $600-800 million quarterly TCV range as reasonable aspiration. Rohit said environment is evolving; team is close to customers; have Plan A and Plan B; aspiration is to close the gap with peer growth this year and be ahead of peer growth in FY27.

▸ Other Q&A (6)
Ravi Menon ·

Asked about the margin tailwind from the 1 percent top-line reduction in scaling down non-core businesses, the FX margin tailwind in Q4, the benefit from support functions consolidation of portfolio companies, how many Global Fortune 500 customers TechM had in FY24, the definition of entry-level workforce (0-3 years?), and current offer acceptance ratio for lateral hires.

Rohit said the 1 percent top-line reduction is part of Project Fortius effort, contributing roughly 20-30 bps of margin benefit, more a risk/reward decision than pure margin impact. FX benefit was 30-40 bps in Q4. Support functions consolidation hasn't been done yet, it's an FY26 plan. Mohit said of the 45 must-have accounts added, roughly a quarter were Fortune 500, so ~10 percent of existing Fortune 500 base. Atul confirmed entry-level workforce is 0-3 years and lateral offer acceptance ratio ranges from above 70 percent for generic skills down to under 50 percent for niche/premium skills, hovering 45-80 percent depending on skill.

Surendra Goyal · Citi

Did macro uncertainty actually impact business towards end of quarter, and what is being seen in the immediate near term? Also on deal TCV, while growth is impressive, TechM did more in FY22/FY23 - is there an aspirational deal flow number for FY26 to deliver industry-leading growth in FY27?

Mohit said yes there was an impact: discretionary spend in auto was cut during the quarter, the hi-tech BPS renewal delay was called out, and some BPS ramp-ups got pushed out (not cancelled). BPS saw some recovery in March. The diversified portfolio across geographies (Europe, APAC, IMEA) and verticals provides cover. On deals, TechM is happy with momentum but very disciplined; will be prudent and won't compromise margin. Rohit added the $600-800 million quarterly range is sufficient given the current view; will up it as environment improves.

Abhishek Kumar · JM Financial

Two questions on deals: TechM has been winning deals despite being prudent on margin profile; in an environment of constrained budgets and aggressive competition, is that strategy a risk going into FY26? Also, was there any change in deal closure momentum towards end of March or in April?

Mohit said TechM is winning despite prudence because of differentiated strengths: diamond-shaped talent pyramid (less broad than peers), deep engineering, higher average years of experience, telecom software differentiation, Mahindra Group relationships. Prudence is especially on the contracting side - no open-ended liabilities, clear scope, fewer suppliers. Atul added the strategic solutions team capabilities (deal architects, solution architects) combining consulting/engineering/BPS/IT and AI/automation focus. Rohit observed each SBU leader's individual involvement in deals is much higher than before, and significant deal closure momentum was seen towards quarter end. Mohit noted no deals being cancelled or delayed.

Vibhor Singhal · Nuvama

On the manufacturing vertical - peers and ER&D companies have flagged this as the vertical likely to face headwinds. What is TechM seeing, and is this a potential headwind that mitigates growth from telecom or large deals?

Mohit said European auto exposure is limited (apart from Pininfarina). US auto exposure exists but TechM also has aerospace deals and a large German chemical (process manufacturing) win. The portfolio is balanced - manufacturing is not just auto. Seeing good traction in Japan (one client did 22 site visits before signing). Building deep solutions: vehicle recall and safety, warranty management, Factory of Future, Industry 4.0. The depth of solutions with diversified portfolio should protect even in slowdown. H1 grew in manufacturing, H2 shrank, but TechM is less exposed to Europe auto than peers.

Rodd Bourgeois · Deep Dive Research

Are there certain types of services that are best resonating with clients amid today's heightened macro uncertainty? Are you more actively emphasizing certain offerings to help clients respond to macro challenges?

Mohit said focus on consolidation and cost take-out is significant - TechM is seen as a credible player, the diamond-shaped talent structure is attractive because clients want cost takeout without taking risks. GCCs are another emphasized area given TechM itself originated from a GCC (BT JV); building specific GCC solutions, hired Sahil to lead, with build-operate-transfer and variable capacity options. Across verticals (Lifesciences, Manufacturing, Financial Services), continuing to see pockets of opportunity.

Yoggesh Agarwal · HSBC Securities

What percentage of loss-making businesses have been pruned - more to go or mostly done last year? Color on BPO business composition (voice vs non-voice) and potential Gen AI impact since BPO is typically the first target for Gen AI optimization?

Mohit said BPS has shifted from historically ~70 percent voice/contact center to slightly over a third voice/contact center. In contact center space, TechM has built agent assist and agentic AI solutions offering agents+human packages, no longer pure bums-on-seats. BPO has been through multiple automation rounds but demand is still there; remains optimistic as TechM transforms BPO to agentic AI + human model. Rohit said FY24 had bigger loss-making actions; FY25 had ~1 percent walked away from; remaining are recovery portfolios with strong margin improvement plans (e.g., underperforming portfolio companies given to Biren under BPS); midway through journey, expect profitability improvement.

▸ Prepared remarks (4 blocks)
Mohit Joshi opened by highlighting that TechM closed FY25 with revenue of <strong>$6,264 million</strong>, up 0.3 percent on constant currency. Operating profit reached $607 million, a 60 percent YoY growth, with margins expanding 360 basis points to 9.7 percent driven by Project Fortius. Vertical performance: BFSI grew 5.2 percent, Retail 4.5 percent, Healthcare 3.4 percent; Manufacturing declined 1 percent, Communications declined 4.2 percent, Hi-tech remained flattish. Geography: Americas declined 2 percent, Europe flat, ROW grew 5.9 percent. Deal wins for the year were $2.7 billion, up 42.5 percent YoY, including two large $100M+ deals in Q4. Q4 revenue was $1,549 million, growth of 0.3 percent YoY constant currency, impacted by US hi-tech client renewal delay and retail seasonality. Operating margin for the quarter was 10.5 percent, expansion of 310 bps YoY and 40 bps QoQ. Mohit announced the launch of TechM Consulting led by Arjun Saxena, the AI Delivered Right strategy with four pillars (productivity, transformation, innovation, assurance), and welcomed Scott Sorokin for Digital Transformation. Notable deal wins included a US Tier 1 Telco device test/certification deal, healthcare Medicaid CMS interoperability deal, US aerospace compute deal, and a strategic US retailer engineering hub.
Strategic partnerships expanded with NVIDIA, Google Cloud, Qualcomm (IndusQ LLM integration), AI-RAN Alliance, Rakuten Symphony, and Cricket Wireless (Aktivate). FY27 plan reaffirmed: growth ahead of peer average, EBIT margin of <strong>15 percent</strong>, ROCE >30 percent. Free cash flow of $150 million in Q4. Final dividend of Rs 30/share announced, total FY25 dividend Rs 45/share, 104 percent payout ratio. Strategic discussion covered the TechM flywheel, Scale at Speed narrative, 162 Fortune 500 clients, 45 must-have accounts added, NPS moved from median to top quartile, employee satisfaction at 3-year high, 90 percent of analyst quadrants in top two (vs 79 percent prior year). Cultural transformation pillars: simplify, clarify, innovate, perform. Mahindra Group synergy across Industry 4.0, Mahindra Finance, EV car configurator. Atul Soneja covered Project Fortius levers: fixed-price productivity, pricing optimization (Rapid platform), portfolio integration, utilization/onsite-offshore, learning and development (Velocity program). Service line focus: Enterprise Apps, Engineering, Next-Gen Services, Cloud.
Rohit Anand walked through Q4 financials. Revenue was <strong>$1,549 million</strong> versus $1,568 million prior quarter, declining 1.2 percent sequentially on reported basis and flat YoY. On constant currency, revenue declined 1.5 percent sequentially with 0.3 percent YoY growth. The sequential decline was driven by delay in closure of a renewal deal in hi-tech segment in BPS space, expected to regularize in coming months. INR revenue was Rs 13,384 crores versus Rs 13,285 crores in Q3, a 0.7 percent sequential growth and 4 percent YoY growth on favorable FX. Communication grew 1 percent sequentially supported by Comviva seasonality. BFSI grew 2.4 percent sequentially and 6 percent YoY. Manufacturing declined 0.2 percent QoQ. Hi-tech declined 8.2 percent QoQ and 4 percent YoY. Deal wins ended at $798 million, up 60 percent YoY. EBIT was $163 million, up 2.8 percent QoQ and 43.6 percent YoY. EBIT in INR was Rs 1,405 crores with margin of 10.5 percent, expansion of 40 bps QoQ. Margin walk: wage hikes negatively impacted by 1 percent, offset by Project Fortius operating actions, Comviva seasonality, and favorable FX. Effective tax rate came in at 22 percent due to one-time refunds versus normalized 26-27 percent run rate. Full-year tax rate was 24.8 percent. PAT was $136 million, up 17 percent QoQ and 71 percent YoY. PAT in INR was Rs 1,167 crores, margin of 8.7 percent, expansion of 130 bps sequentially and 350 bps YoY.
Free cash flow was <strong>$150 million</strong> for the quarter. DSO at 88 days versus 92 days same quarter last year. Hedge book at $1.96 billion versus $2.1 billion last quarter. Mark-to-market gain of $5.9 million for the quarter. Full year revenue was $6,264 million, constant currency growth of 0.3 percent, decline of 0.2 percent reported. Rupee revenue was Rs 52,988 crores, growth of 1.9 percent. BFSI delivered 4.3 percent growth, HLS 3.7 percent, Retail 4.4 percent. Hi-tech flat, manufacturing declined 1.6 percent, Comms declined 5 percent. TCV for the year was $2.7 billion, up 42.5 percent YoY. EBIT for the year was $607 million, up 60 percent in USD terms. Rupee EBIT was Rs 5,138 crores, margin 9.7 percent, expansion of 360 bps. FCF for year was $613 million, cash and cash equivalents $896 million. Dividend payout ratio 104 percent of PAT and 122 percent of FCF. Rohit later articulated $600-800 million quarterly TCV range, ROCE goal of >30 percent (currently 22 percent), commitment to return >85 percent of FCF as dividend, and ERP integration progress at 60 percent.
Watch next