Chief Financial Officer, Tech Mahindra Limited
Tech Mahindra Q1 FY'27 Results LIVE
Watch Tech Mahindra's Q1 FY'27 Results LIVE
July 16th at 4:20pm IST
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About Rohit Anand
Rohit Anand, Chief Financial Officer of Tech Mahindra, presented the company's Q1 FY27 financial results on July 16, 2026. He reported that the company delivered its strongest revenue growth since the start of a three-year turnaround plan, with revenues of $1.66 billion, representing 6.1% year-on-year growth on a reported basis and 6.6% in constant currency. Anand stated that operating margins stood at 14.4% and that the company had expanded margins for 11 consecutive quarters. He noted that the company secured another quarter of over $1 billion in deal wins and highlighted improvements in free cash flow, which rose 94% year-on-year to $167 million, and days sales outstanding, which improved to 84 days, a reduction of five days quarter-on-quarter. Return on capital employed was reported at 28.3% for the quarter, a sequential improvement of 210 basis points. Anand said the company would continue to invest in AI capabilities, including in domain-specific and sovereign AI areas, and reiterated a target of delivering 15% margins on average for the full fiscal year. In a separate interview published on June 30, 2026, Anand discussed his leadership approach and decision-making philosophy. He described the current environment as one of "perma crisis," with permanent geopolitical, macroeconomic, or technology disruptions, and said that navigating such uncertainty requires a balanced approach. He stated that he prioritizes data-driven decisions over instinct, and sustainable growth over growth at speed. Anand also said that while the perception of a CFO is often focused
Transcript (15 segments)
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Unknown2:16
Hey. Hey. Hey. All right. Heat. All right. All right.
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Velasha8:14
Hello everyone. I welcome you all to Tech Mahindra results press conference. Before we begin, I'd like to inform you there will be a Q&A session at the end. Today we have with us on stage CEO and managing director Mohit Chi and chief financial officer Rohit Anand. Without any delay, over to you Mohit.
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Mohit8:36
Thank you Velasha and thank you all. Thank you all for joining us and let me now take you through our Q1 FY27 performance. So just a little bit of a background. In April 24, we presented a three-year turnaround plan with very clear goalposts and measurable markers for success. The first year of our plan, as you would recollect, was focused on laying the foundations which would lead to margin expansion. And the final year of the plan, we would see growth outpacing our peers. So now in the final year of our turnaround journey, we are seeing the increased benefits of the investments and the actions that we've taken over the past two years. We have delivered margin expansion consistently over the past two years. More recently, our growth has begun to move ahead of the peer average. We had said that in the third year of the transformation that we would pivot strongly to growth and as the numbers today show we have done just that. For the quarter we have reported revenues of US dollars 1.66 billion representing a 6.1% year-on-year growth on a reported basis and 6.6% growth in constant currency.
This performance reflects continued momentum across the business, broad-based growth across our key verticals, progress in our AIEL strategy, and very strong client engagement across markets. Operating margin stood at 14.4%, this reflects the sustained execution discipline, the operational rigor, and the continuous focus we've had on profitable growth.
Let me now turn to performance across our key verticals. Our communications vertical grew by 1.3% year-on-year. The vertical continued to benefit from stability in key accounts, sustained client engagement, and the ramp up of large deals secured over the last few quarters. Our communications experience center in Pune is strengthening the way we engage with clients. The center brings together immersive demonstrations, integrated solutions, and industry specific use cases in one environment. The banking and financial services sector for us grew 8.1% year-on-year. We continue to see healthy demands in areas like payments modernization, wealth platforms, regulatory compliance, identity and access management and AI-driven transformation. During the quarter, we also announced the acquisition of Avant Technosolutions, a Canadian-based firm specializing in payments modernization and wealth platforms. The acquisition is aligned with our stated strategy of deepening our presence in payments and the wealth segment which we have consistently identified as important growth areas. It also strengthens our position in a structurally high growth segment of financial services. The manufacturing sector for us grew 17.2% year-on-year. Our focus remains on scaling sustainable growth across aerospace, industrial and process manufacturing. We continue to see strong client interest in intelligent data-driven operations that bring together AI data platforms, engineering and enterprise systems at scale.
Retail, travel and logistics grew 8.6% year-on-year supported by momentum across e-commerce expansion, logistics modernization, automation, warehousing and last mile delivery optimization. We are bringing together our digital data engineering and experience capabilities to help our clients improve efficiency and customer engagement across the value chain. Our healthcare business grew 7.2% year-on-year supported by momentum across providers and life sciences. We are seeing opportunities in vendor consolidation and AI-driven discretionary spend. Our AI solutions catalog developed in partnership with the hyperscalers and other ecosystem partners is helping us win new clients and take differentiated solutions to existing clients. Overall, every vertical delivered year-on-year growth during the quarter based on our pipeline and the ramp up of recent deal wins. We expect this positive momentum will continue subject of course to the broader macroeconomic environment.
Very encouraging for us is the continued deepening of client relationships. The number of clients generating for us more than $50 million in revenue increased by seven year on year reflecting the trust our clients place in us and our ability to expand strategically within our key accounts. Another important area of progress during the quarter was TechM Helix which represents the next phase of our AI-led transformation. It brings together our platforms, our talent partnerships and our innovation efforts to help clients adopt AI at scale.
A key milestone in this has been the launch of our agentic development and modernization services portfolio. This next-gen offering is designed to help enterprises reimagine how applications are built, modernized and operated by embedding agentic AI across the application life cycle. This portfolio enables clients to accelerate their transition towards AI-driven autonomous enterprise ecosystems. Alongside this, we continue to scale our Agentic AI platform ecosystem led by TechM Orion which enables multi-agent orchestration across complex enterprise environments. So these AI market investments they are complemented by a strong innovation engine. The makers lab continues to play a central role in advancing applied AI research and engineering led innovation across Tech Mahindra. During the quarter Frost and Sullivan recognized Orion marketplace our next-gen agentic AI solution that enables enterprises to design deploy and manage autonomous action-oriented AI agents across business processes. Its hyperscaler agnostic architecture supports rapid deployment across assisted and fully autonomous modes while maintaining enterprise-grade governance, transparency and life cycle control.
While capability and innovation form the foundation of Helix, scale will come from real world enterprise adoption and a strong partner ecosystem. During the quarter, we continue to expand our ecosystem across hyperscalers, enterprise platforms, and emerging AI players, enabling us to bring more integrated and industry specific AI solutions to clients. One example is our collaboration with Microsoft on AI-driven 5G network digital twin solutions for autonomous network operations. This solution is designed to help communication service providers modernize their networks, improve service performance and accelerate the monetization of next-gen 5G capabilities. Another example is our partnership with Kitsa, the AI operating system for clinical startups to advance agentic AI-driven medical writing solutions for the global pharma and biotech industry. In Europe, we expanded our relationship with Telefonica Germany through a multi-year engagement to build an AI first private cloud platform. So these examples reinforce an important shift that we're seeing in the market. AI adoption is moving beyond pilots into production environments. Helix is enabling us to support this transition by integrating platforms, talent, partnerships, innovation and delivery capabilities into a more scalable operating model. It is also bolstering our ability to structure and deliver outcome based engagements.
Let me also briefly touch upon two of our portfolio companies Comviva and Pininfarina. Comviva as you know is our telecom software arm. It continues to build momentum supported by revenue growth, improved margins and a healthy order book. Drawing on a heritage of more than nine decades, Pininfarina is preparing for its own AI-driven transformation of its mobility and architecture businesses while strengthening its commercial and operational foundations. Moving now to deal momentum, we delivered total deal wins in the quarter of 1.078 billion. The wins are broad-based across key verticals and geographies with the largest deal coming from the manufacturing and the healthcare life sciences verticals. I think this performance reflects continued client confidence in Tech Mahindra and our ability to deliver transformation programs anchored in domain expertise, operational execution and AI capabilities.
Based on the annual contract value won over the last 12 months, ISG named Tech Mahindra among the top 15 sourcing standouts across all regions, global, Americas, EMEA and Asia. Let me share a few notable wins from the quarter. A leading regional health system in the US selected TechM as a strategic partner for an integrated applications and infrastructure managed services engagement. This is leveraging our experience supporting 200 plus health systems and deep healthcare transformation expertise. We will help them strengthen operational resilience, accelerate modernization and enhance caregiver and patient experiences. We were selected by an American autonomous driving technology company to enhance the scaled rollout of the fully autonomous technology across US cities and global markets. This deal will leverage TechM's strong GIS domain expertise to deliver high-quality HD map development and maintenance services for the customer's technology. A leading global aerospace and defense company selected Tech Mahindra to provide end-to-end database administration services across a complex mission critical environment and enhance the customer's long-term digital transformation objectives through AI-driven operations, strengthen cyber security and compliance and cloud ready operations. We were also selected by a leading global payments technology company as a preferred technology partner to support its next-gen product and program roadmap. Leveraging TechM's product engineering expertise, payment domain knowledge and AI-driven delivery capabilities, the collaboration will help scale innovative payment solutions, reduce technical debt and drive KPI outcomes across global operations. During the quarter, we partnered with Perplexity and deployed Perplexity Enterprise Pro across our sales and client-facing teams. By embedding AI-powered intelligence into account planning, pursuit strategy and client conversations, we are enabling our teams to develop more relevant insights and shape stronger transformation propositions.
Lastly, I'm proud to share that Tech Mahindra has once again been recognized as one of the world's most sustainable companies by Time and ranked number one among Indian corporates. This recognition reflects our continued commitment to environmental stewardship, responsible business practices and long-term value creation. It also reinforces our focus on extending sustainability beyond our own operations and working closely with partners and suppliers to build a more resilient and sustainable ecosystem. Before I close, I want to highlight an initiative that is personally quite meaningful to me. During the quarter, we announced the Tech Mahindra Global India Book Prize in partnership with the Jaipur Literary Festival. I've always believed that books shape not just what we know but also how we think. So in a world being reshaped by technology, the ability to explain, to question, to interpret and to connect ideas is more important than ever. And this initiative reflects the broader spirit of Tech Mahindra's transformation, learning continuously, engaging deeply and building for a future where technology and human understanding move forward together. With that, I will hand over to my colleague Rohit, who will take you through the financial performance for the quarter. Thank you.
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Rohit Anand20:28
Thank you, Mohit. Good evening everyone. Thank you for joining. I'm pleased to report a strong start to FY27 with our first quarter performance reflecting the momentum we are carrying into this financial year. We delivered the strongest revenue growth since the start of the transformation journey while continuing to expand margins for 11th consecutive quarter. We also maintained strong deal momentum as Mohit mentioned securing another quarter of over a billion dollar deal run rate. In Q1, we reported revenues of 1660 USD million, representing a growth of 2.2% and 6.1% on a reported basis year-on-year. On a constant currency basis, revenue grew 2.6% quarter-on-quarter and 6.6% year-on-year. Manufacturing led the growth delivering 9% on a quarterly basis driven by sustained momentum in aerospace along with earlier than planned execution of a large European automotive program which contributed to higher revenue this quarter. This was followed by BFSI at 2.7% quarter-on-quarter and healthcare and life sciences at 2.5% quarter-on-quarter. The underlying communication business remained healthy during the quarter supported by large deal ramp-ups and growth in top clients. The core business continued to grow sequentially while the reported performance was impacted by seasonality in the Comviva business and a one-time transition associated with clients post-acquisition integration and insourcing of cloud revenue. Technology media and entertainment declined 1.7% quarter-on-quarter on account of continued volatility in client spends. From an INR perspective revenue stood at 15,712 crores growing 4.2% quarter-on-quarter and 17.7% on a year-on-year basis.
Our total deal wins for the quarter stood at 1078 million up 33% on a year-on-year basis. As Mohit highlighted earlier, the performance reflects the trust our clients place in Tech Mahindra and the increasing relevance of our offerings. Importantly, the momentum was broad-based across multiple verticals with strong contributions from BFSI, manufacturing and healthcare. EBIT margins for the quarter are at $238 million US with EBIT percent at 14.4 up almost 60 basis points quarter-on-quarter and 330 basis points on a year-on-year basis. The margin expansion was led by volume growth and savings from project Fortius partially offset by Comviva seasonality and business mix. In rupee terms operating profit stands at 2264 crores up 53.3% on a year-on-year basis. Our effective tax rate for the quarter came at 27.2%. Our profit after tax for the quarter was 154 million, a year-on-year increase of 16.2%. In INR terms, PAT is at 1,465 crores with a PAT margin of 9.3% an expansion of 80 basis points on a year-on-year basis. We generated 167 million of free cash flow during the quarter up 94% on a year-on-year basis. Higher collection efficiency supported the DSO improvement to 84 days a reduction of 5 days on a quarter-on-quarter basis. Our return on capital employed stood at 28.3% for the quarter reflecting a sequential improvement of 210 basis points. On a year-on-year basis, ROCE improvement is 450 basis points driven by enhanced profitability and disciplined capital allocation. We continue to invest in our AI capabilities. As Mohit mentioned, our makers lab, which remains the core of our innovation engine, helps us translate emerging technologies into practical enterprise solutions. At the same time, we're building differentiated capabilities in domain specific and sovereign AI areas where we believe demand will continue to grow as enterprises seek greater control, governance, and contextual relevance in their AI deployments. As we look ahead, we'll continue to invest in the areas that we believe will shape the next phase of growth for the industry. Our focus remains on building a future ready enterprise by strengthening our AI capabilities, expanding our platform ecosystem, and investing in the talent required to deliver AI at scale. To sum up, this quarter is a testament to the disciplined execution of our strategy and the trust our clients continue to place in us even amidst a volatile macroeconomic environment. Delivering high single-digit year-on-year growth alongside strong profitability demonstrates the progress we made in strengthening the fundamentals of the business. Thank you.
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Velasha25:04
Thank you Mohit and Rohit. We will now conclude this stream. For those of you who've joined us on social media, thank you again for joining us. We will now open the conference for a Q&A session.