TECHM

Eyes FY27 Growth Outperformance

, under CEO Mohit Joshi’s turnaround strategy launched in 2023, has concluded its stabilization phase and is now pivoting toward execution-led acceleration. FY26 marked a return to positive revenue growth, margin expansion, and record deal wins. Management reiterated its FY27 goals: outperform peers on growth and achieve the final leg of margin improvement. Despite sector-wide sentiment dampened by HCLTech’s weak results and AI-led deflation concerns, Tech Mahindra’s restructuring progress offers optimism. Financial Performance (Q4FY26) Constant currency (CC) revenue: +0.6% QoQ, beating consensus. Verticals: BFSI, technology/media/entertainment, and communications drove growth; retail & healthcare lagged. Deal wins: second straight quarter with TCV >$1 billion. FY26 TCV rose 42% YoY to $3.8 billion, highest ever. EBIT margin: 13.8% (+70bps QoQ), marking the 10th consecutive quarter of improvement. FY26 margin expanded 290bps to 13.8%. Margin drivers: Project Fortius efficiencies, currency tailwinds, Comviva seasonality. Offsets: AI investments, large-deal transition costs. PAT: impacted by higher forex losses. Strategic Outlook Margin target FY27: 15% (Nuvama assumes 14.5%). Levers include gross margin improvement, delivery efficiency, and fixed-price margin-accretive deals. Growth ambition: industry growth seen at 2–5%; Tech Mahindra aims to outperform peers. Key risks: macroeconomic volatility, client budget stability, and timely deal conversions. Vision FY30: to be outlined once FY27 milestones are achieved. Valuation Context Stock fell ~3% post-results, trading at ~17x FY28E earnings (Bloomberg consensus). Conclusion Tech Mahindra’s turnaround is gaining traction, with strong deal wins and consistent margin expansion positioning it well for FY27. Execution on revenue conversions and sustaining margin levers will be critical to delivering on its ambitious targets.