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Financial Performance: Tech Mahindra reported revenues of $1.567 billion, indicating a constant currency growth of 1.3% year-over-year and 1.2% sequentially. However, reported figures declined by 1.3% quarter-on-quarter and 0.4% year-over-year due to adverse currency fluctuations. In INR terms, revenue reached ₹13,286 crore, reflecting a slight decrease of 0.2% reported, but a constant currency growth of 1.4% year-over-year. The BFSI vertical led growth with a sequential increase of 2.7%, while the Healthcare sector rose by 4.5%. EBIT stood at $159 million, translating to ₹1,350 crore, yielding an EBIT margin of 10.2%, an improvement of 60 basis points despite currency headwinds.
Future Outlook and Growth Drivers: Management discussed a strong focus on large deals and emphasized quality over quantity in their pipeline. They are pursuing a balanced revenue mix, particularly in telecom, BFSI, and healthcare, and expressed confidence in achieving a target EBIT margin of 15% by FY27. Continued investment in generative AI and strategic collaborations are expected to bolster long-term growth.
Order Book and Operational Updates: In Q3 FY25, Tech Mahindra secured new deal wins worth $745 million, increasing their last twelve months (LTM) deal wins to $2.4 billion. Key projects include network transformation for a major chemical manufacturer and collaboration with a large European telecom provider for service modernization.
Analyst Q&A Insights (Detailed): Analysts raised questions about revenue projections, the competitive landscape, operational challenges, and capital allocation plans. Management reassured that the uptick in deal activity signifies improvement and that their transformation strategies position them well against peers. They recognized ongoing challenges in the automotive sector but highlighted resilience in their broader manufacturing and telecom operations.
Market or Regulatory Updates: While the call did not delve into specific regulations, the general market sentiment reflects a cautious optimism, particularly in telecom and BFSI sectors.
Strategic Focus Areas: Tech Mahindra is focusing on enhancing its service lines, investing in AI capabilities, and improving operational efficiency through automation and lean methodologies. Emphasizing quality deals suggests a prudent approach amid uncertain market conditions.
Investor Insight: The steady financial performance coupled with a robust order book and strategic investments supports a ‘buy’ stance. The potential to sustain growth into FY27 appears promising, despite some sector-specific headwinds.