In the latest financial update, Tech Mahindra revealed that revenue figures for the fourth quarter were influenced by slower decision-making processes. According to Mohit Joshi, the managing director and CEO of Tech Mahindra, a significant contract renewal in the U.S. faced delays, impacting overall performance.

Key Financial Insights for Q4

Despite challenges, the management highlighted that EBITDA and profit growth stemmed from operational efficiency initiatives undertaken during this quarter.

• Rohit Anand, the company’s chief financial officer, stated, “We experienced a profit increase partly due to a 40 basis points improvement in EBIT quarter-over-quarter, despite wage hike impacts. Additionally, we benefited from one-time gains, positively affecting our effective tax rate, which stands at 22%.”

In terms of client engagement, Tech Mahindra reported a decrease in active clients, falling to 1,162 in Q4 FY25 from 1,175 in the previous quarter and 1,172 a year earlier. Anand explained that this decision aligns with a strategic shift towards fostering long-term partnerships with key clients.

Profit and Shareholder Returns

The company achieved a remarkable 60% increase in operating profit, driven by enhanced operational leverage and cost management strategies.

• Dividend per share was raised by 12.5%, with 85% of free cash flow returned to shareholders, underscoring the firm’s commitment to a robust capital allocation policy.

Despite facing macroeconomic challenges, including ongoing tariff tensions that may affect revenue visibility, Tech Mahindra is steadfast in its goal of maintaining a 15% margin for FY26.

New Deals and Revenue Growth

In Q4, Tech Mahindra secured new deals totaling $798 million, a rise from $745 million in Q3 and an increase from $500 million the previous year.

• Joshi remarked, “Our total deal wins of $2.7 billion represent a 42% year-on-year increase, showcasing the strength of our client relationships.”

For the entire fiscal year, Tech Mahindra reported a 1.9% increase in revenue, reaching Rs 52,988 crore, with EBITDA climbing to Rs 6,991 crore and profit after tax (PAT) soaring 80.3% year-over-year due to a significant reduction in costs from the impairment of goodwill and non-current assets.

Employee Metrics and Hiring Plans

During the quarter, the workforce saw a 1.2% dip, bringing the total headcount to 148,731 by the end of March. However, this figure marks a 2.3% increase compared to the previous fiscal year.

• The utilization rate remained steady at 86%, although attrition rose to 11% from 10% in the previous quarter.

Tech Mahindra had initially planned to hire 6,000 graduates in FY25 but ended the year with 6,100. Management acknowledged that global tariff uncertainties could influence hiring strategies for the upcoming fiscal year.

• Joshi noted, “The extent of hiring this year will hinge on demand visibility, which is currently uncertain. We anticipate improvement in the future.”

Industry Performance Overview

In terms of sector performance, the communications sector led revenue contributions at 33.2%, followed by manufacturing at 17% and BFSI (banking, financial services, and insurance) at 16.7%.

• Only the communications and BFSI sectors showed growth, increasing by 1% and 2.4% respectively, while manufacturing, healthcare, and the hi-tech and media sectors experienced declines ranging from 0.2% to 8.2%.

Geographic Revenue Breakdown

Geographically, the Americas accounted for 48.4% of Tech Mahindra’s revenues, while Europe contributed 25.4% and the rest of the world 26.2%.

• The Americas faced a 5.9% sequential decline and 4.7% annual drop, whereas Europe grew by 6.3% sequentially and 5.1% year-on-year.

In summary, while Tech Mahindra navigates through certain challenges, its strategic focus on operational efficiency and client partnerships appears to position it well for future growth.