Tech Mahindra (TECHM) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue reached $1.589 billion (₹133,132 million), up 2.2% YoY and 1.9% QoQ, with Europe and Rest of World leading growth, while Americas declined 2% YoY due to telecom client budget constraints.

• PAT margin improved to 9.4%, with EBIT margin at 9.6%, both showing significant YoY and QoQ expansion.

• New deal wins totaled $603 million, with broad-based contributions across key markets and verticals.

• Interim dividend of Rs. 15 (INR 16 in some reports) per share declared, with record date set for November 1, 2024.

• Margin expansion continued for the third consecutive quarter, driven by operational excellence initiatives under Project Fortius.

Financial highlights

• Q2 FY25 revenue was $1.589 billion (₹133,132 million), up 1.9% QoQ and 2.2% YoY; in INR, revenue was up 2.4% QoQ and 3.5% YoY.

• EBIT margin reached 9.6%, expanding 110 bps QoQ and 490 bps YoY; EBIT was $150–153 million, up 16.2% QoQ and 109.1% YoY.

• PAT was $149 million (₹12,501 million), with a PAT margin of 9.4%, up 280 bps QoQ and 560 bps YoY.

• Free cash flow was $157 million, representing 105.4% of PAT; cash and equivalents stood at $784 million (₹65,660 million).

• DSO at 94 days; diluted EPS increased to Rs. 14.1.

Outlook and guidance

• Management expects Q3 to be seasonally weaker due to furloughs, with demand environment largely unchanged except for softness in manufacturing, especially auto.

• Deal win trajectory in the $600–800 million range per quarter is targeted to achieve industry-average growth next year.

• Continued focus on margin expansion, cost optimization, and strategic investments to meet FY2027 targets.