Why Did Tech Mahindra's Q1 Net Profit See a 2.2% Decline?
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Synopsis
In the latest quarterly report, Tech Mahindra revealed a 2.2% drop in net profit for Q1 FY26, amidst a complex market. Despite this, the company demonstrated resilience with a 34% YoY profit growth. Discover how ongoing projects are shaping their operational success.
Key Takeaways
- Net profit down by 2.2% to Rs 1,140 crore.
- Revenue decreased by 0.2% to Rs 13,351 crore.
- Year-on-year, net profit grew by 34%.
- EBITDA rose by 3.6% QoQ.
- Project Fortius driving operational improvements.
Mumbai, July 16 (NationPress) Tech Mahindra announced a quarter-on-quarter (QoQ) drop of 2.2 percent in its net profit for the first quarter (Q1) of FY26, with earnings decreasing to Rs 1,140 crore.
The firm also experienced a minor revenue decline, reported at Rs 13,351 crore, which is a 0.2 percent decrease compared to the previous quarter (Q4 FY25), as per its stock exchange disclosure.
Notably, despite the dip in revenue and profit, Tech Mahindra improved its operating efficiency, achieving a 3.6 percent QoQ increase in EBITDA, now at Rs 1,935 crore.
On a year-on-year (YoY) basis, the company exhibited growth across key performance indicators.
Net profit surged by 34 percent, revenue saw a 2.7 percent increase, and EBITDA also rose by 34 percent, according to the firm’s statement.
However, the U.S. market, which accounts for nearly half of Tech Mahindra's total revenue, reported a 5.9 percent year-over-year decline.
The company’s net new deal bookings increased to $809 million this quarter, up from $798 million in the prior quarter and significantly higher than the $534 million booked in the same quarter last year.
According to Rohit Anand, Chief Financial Officer of Tech Mahindra, the company has achieved seven consecutive quarters of margin expansion.
He emphasized that the ongoing ‘Project Fortius’ continues to yield substantial operational enhancements, even amid challenging conditions.
CEO and Managing Director Mohit Joshi stated that the company’s performance is steadily strengthening.
He highlighted a 44 percent increase in deal wins over the past year, fueled by positive trends across various sectors and global markets.
In dollar terms, Tech Mahindra's net profit rose 30 percent YoY, while revenue slightly increased by 0.2 percent.
The company's EBITDA margins improved by 260 basis points, reaching 11.1 percent.
In terms of sector performance, the Communications segment rose 2.8 percent QoQ and 2.5 percent YoY.
The BFSI segment fell 0.6 percent from the last quarter but was up 4.7 percent YoY.
Manufacturing grew 4 percent sequentially but decreased by 4 percent from the same period last year.
Tech Mahindra reported a total workforce of 148,517 employees in the first quarter, an increase of 897 from the same quarter a year ago.
The attrition rate during this quarter slightly rose to 12.6 percent.
On the stock market, Tech Mahindra shares closed almost 2 percent higher at Rs 1,608.5 each on the NSE.
Point of View
It is essential to recognize Tech Mahindra's challenges and successes in a fluctuating market. Their ability to improve operational efficiency, despite a decrease in net profit, signifies a robust strategy. The ongoing projects and deal wins reflect a commitment to growth, showcasing the company as a resilient player in the IT sector.
NationPress
17/07/2025
Frequently Asked Questions
What was the net profit of Tech Mahindra in Q1 FY26?
Tech Mahindra's net profit for Q1 FY26 was Rs 1,140 crore, which represents a 2.2% decline from the previous quarter.
How did Tech Mahindra's revenue perform in Q1 FY26?
The revenue for Tech Mahindra in Q1 FY26 was Rs 13,351 crore, showing a slight decline of 0.2% compared to the previous quarter.
What improvements did Tech Mahindra report on a year-on-year basis?
Year-on-year, Tech Mahindra reported a 34% growth in net profit, a 2.7% increase in revenue, and a 34% rise in EBITDA.
What is Project Fortius?
Project Fortius is an initiative by Tech Mahindra aimed at delivering operational improvements and enhancing overall performance in a challenging market.
What is the current attrition rate at Tech Mahindra?
Tech Mahindra's attrition rate for the quarter rose slightly to 12.6%.
