Tech Mahindra Q1 Results Preview: Profit to witness double-digit rise; deal wins, AI bets, margin push in focus

Tech Mahindra Q1 Results Preview: IT major Tech Mahindra is expected to report strong double-digit profit growth for the April–June quarter (Q1) of FY27, driven largely by large deal ramp-ups in the telecom segment, according to brokerage estimates. The company’s board is scheduled to announce its financial results on Thursday, July 16.

Despite the expected improvement in profitability, analysts remain cautious on the broader demand environment, citing macroeconomic uncertainty and disruptions from artificial intelligence-led shifts in spending patterns. Wipro is also set to report its Q1 earnings on the same day.

Anand Rathi believes the Q1 performance indicates stabilising demand rather than a strong recovery. The brokerage described the near-term outlook as modestly negative for Indian IT services, citing delayed deal closures and weak discretionary spending.

However, it highlighted that strong consulting bookings, large AI transformation programmes, and global confidence in AI-led spending could support long-term growth for large IT vendors.

Revenue growth: Most brokerages expect Tech Mahindra’s revenue to grow about 1% quarter-on-quarter in constant currency terms, reflecting steady but unspectacular growth.

ICICI Securities estimates revenue at ₹15,530 crore, implying a 16.3 percent year-on-year and 3% quarter-on-quarter (QoQ) increase. In constant currency terms, it expects growth of 1.1% sequentially.

YES Securities projects revenue at ₹15,290 crore, up 14.6% year-on-year and 1.4% sequentially, with constant currency growth pegged at 1% QoQ.

According to Motilal Oswal, constant currency growth is likely to remain around 1%, supported by continued ramp-up of large telecom contracts. Growth is expected to be led by the communications, BFSI and retail verticals, while automotive and high-tech segments are likely to remain under pressure.

Deal wins: Large deal wins continue to be a key driver for Tech Mahindra’s near-term performance. Analysts expect healthy deal inflows, although slightly moderating from previous quarters.

Led by a ramp-up of strong large deals TCV won in FY26, partly offset by seasonal weakness in the Comviva business, ICICI Securities expects a 16.3% year-on-year (Y-o-Y) and 3% QoQ growth in revenue for the quarter under review to ₹15,530 crore.

Brokerages highlight that the key monitorable will be the pace at which these deal wins convert into actual revenue over the coming quarters, particularly as delays in deal closures remain a concern across the sector.

Margins: Operating margins are expected to improve sequentially, aided by cost optimisation initiatives and benefits from Project Fortius.

ICICI Securities expects EBIT margin to expand by 30 basis points quarter-on-quarter to 14.1%, driven by operating efficiencies and currency tailwinds. However, this could be partly offset by employee cost restructuring linked to new labour codes and headwinds from large deal ramp-ups. Motilal Oswal anticipates a sharper margin improvement of around 50 basis points to 14.3%, supported by delivery efficiencies and better gross margins.

Most brokerages expect the company to reiterate its FY27 EBIT margin guidance of around 15%, with execution on cost initiatives remaining critical.

Profit growth: Profit growth is expected to be robust, supported by margin expansion and operating leverage.