BENGALURU, INDIA – Tech Mahindra, India’s fifth-largest IT firm, reported a smaller-than-expected revenue decline for the first quarter, driven by strong performances in the manufacturing and healthcare sectors.
In Q1, consolidated revenue fell by 1.2% to ₹13,005 crores ($1.55 billion), surpassing analysts’ predictions of ₹12,945 crores, according to LSEG data. The robust performance in manufacturing and healthcare has led to increased client spending, especially from US clients.
CEO and Managing Director Mohit Joshi commented, “It is encouraging to see positive momentum in most industry verticals which has led to revenue growth and margin expansion in an otherwise seasonally weak quarter.”
Financial performance and market trends
Over the past three quarters, Tech Mahindra experienced a revenue decline, expanding from a 2% fall in September 2023 to a 6.17% drop in March 2024.
However, the operating margin rose by 170 basis points year-on-year to 8.5% in the June quarter, thanks to reduced sales and administrative costs. This improvement helped the Pune-based company achieve a 28.8% increase in profit, reaching ₹851 crores ($101 million).
The company’s EBITDA margin also improved by 110 basis points quarter-on-quarter, reaching 12%. Additionally, net new deal bookings rose to $534 million, up from $500 million in the previous quarter and $359 million in the same period last year, indicating stronger client engagement and future revenue prospects.
India’s IT sector recovers
India’s $254 billion IT sector has faced slow demand recently, with clients cutting back on non-essential projects due to economic uncertainties and higher interest rates.
However, Tech Mahindra’s Q1 results, along with strong performances from competitors like Tata Consultancy Services, Infosys, and HCL Technologies, suggest a recovery in North America. These firms have indicated that “the worst might be over for the sector.”
Chief Financial Officer Rohit Anand stated, “The company’s Q1 results are a positive start both for the current turnaround year as well as for our medium-term strategy.”
