Nine consecutive quarters of margin expansion, a sharp rebound in EBIT, and AI-led deal momentum signal a structural reset at the IT services major
Bengaluru, NFAPost: Tech services major Tech Mahindra delivered a robust operational performance in the December quarter, underlining a clear turnaround narrative marked by margin expansion, stronger deal execution, and improving cash discipline—even as revenue growth remained modest in a cautious global IT spending environment.
For the quarter ended December 31, 2025 (Q3 FY26), Tech Mahindra reported EBIT of ₹1,892 crore, up a sharp 40.1% year-on-year, while new deal wins surged to USD 1.1 billion, the highest level in five years on a trailing-twelve-month basis. The company’s EBIT margin expanded to 13.1%, reflecting both operational efficiencies and a sharper focus on higher-quality, AI-led engagements tml-q3-fy-26-press-release.
Margins Take Centre Stage
The standout feature of the quarter was profitability. EBIT rose 10% sequentially and nearly 33% year-on-year in dollar terms, marking the ninth consecutive quarter of margin expansion. Net profit came in at ₹1,122 crore, up 14.1% YoY, while operational PAT—excluding exceptional items—jumped nearly 35% YoY, highlighting the depth of the operating recovery.
Revenue for the quarter stood at ₹14,393 crore, up 2.8% QoQ and 8.3% YoY, with constant-currency growth remaining subdued at low single digits—broadly in line with sector trends amid delayed discretionary spending.
Free cash flow generation remained healthy at USD 194 million, supported by tighter working-capital controls. Days sales outstanding (DSO) improved to 90 days, while cash and cash equivalents stood at ₹7,666 crore at quarter-end.
Deal Momentum Signals Structural Improvement
Deal wins were a key highlight, rising 47% YoY and 34% QoQ, signalling a meaningful improvement in the company’s go-to-market execution.
“Our deal wins on an LTM basis are the highest we have achieved in the past five years,” said Mohit Joshi, CEO and Managing Director of Tech Mahindra. “The momentum reflects sustained investments in sales, a solution-oriented go-to-market approach, and the growing relevance of our AI-led offerings in addressing client needs.”
The quarter saw large, multi-year engagements across telecommunications, aerospace, healthcare, banking, and communications services—many focused on core modernization, AI-driven automation, and system integration, rather than pilot-scale experimentation.
AI Moves From Experimentation to Execution
Tech Mahindra’s strategy is increasingly anchored around scaling artificial intelligence across enterprise operations. The company partnered with Google to accelerate enterprise adoption of Gemini 2.5 multimodal models, achieved AWS Generative AI Competency, and launched i.GreenFinance, a sustainability-linked lending platform for financial institutions.
Management noted a visible shift from AI pilots to embedded, multi-year transformation programs, positioning AI as both a growth engine and a delivery lever across large accounts.
The company is also actively aligned with India’s AI ambitions, including work on large language models for educationand localization of its Orion platform in Hindi, aimed at widening AI accessibility.
CFO Flags Cash Discipline, FY27 Confidence
Chief Financial Officer Rohit Anand emphasized execution discipline and balance-sheet strength as key enablers of the turnaround.
“This quarter reflects a well-rounded financial performance, marked by the ninth consecutive quarter of margin expansion and continued strength in cash generation,” Anand said. “A sustained focus on working capital discipline has led to improved cash flows and a meaningful improvement in DSO. We remain on track toward our FY27 goals.”
Talent, Sustainability and Industry Recognition
Headcount stood at 149,616, down marginally year-on-year, while IT attrition remained stable at 12.3%, suggesting a more normalized talent environment.
Beyond financials, Tech Mahindra continued to gain external validation—being recognized as a Global Sustainability Leader in the Dow Jones Sustainability Index, earning multiple ISG and Everest Group ‘Leader’ rankings, and securing industry awards across cloud, AI, telecom, and digital engineering services.
The Bottom Line
While revenue growth remains measured, Tech Mahindra’s Q3 performance underscores a structural reset—with margins, deal quality, and execution discipline firmly back in focus. If deal momentum sustains and AI-led programs continue to scale, the company appears well-positioned to convert operational gains into durable growth over the medium term.
