Tech Mahindra (TECHM) Q3 25/26 earnings summary

Executive summary

• Achieved record quarterly deal bookings, including a $500M+ multi-year European telecom contract, the largest in company history, driven by investments in sales and AI-led offerings.

• Revenue grew 2.7% year-over-year and 1.5% sequentially, with broad-based growth across communications, manufacturing, high-tech, retail, and healthcare.

• Operating margin expanded by 290 basis points YoY to 13.1%, marking the ninth consecutive quarter of margin expansion and strong cash generation.

• Strong client additions, including three new $50M clients, and significant growth in $20M+ client revenue.

• AI and digital transformation remain core to strategy, with scaled enterprise adoption, new innovation partnerships, and major collaborations with Google and AWS.

Financial highlights

• Q3 revenue: $1,610M, up 1.5% QoQ and 2.7% YoY (reported); 1.7% QoQ and 1.3% YoY (constant currency).

• EBIT/operating profit: $211M, up 32.8% YoY; operating margin at 13.1%, up nearly 100 bps sequentially and 290 bps YoY.

• Profit after tax margin (excluding exceptional items): 9.2%, up 180 bps YoY; PAT stood at $125M, up 8.3% YoY.

• Free cash flow: $194M for the quarter; FCF to operational PAT at 131% YTD.

• Exceptional item: $30M one-time provision due to new Wage Code notification.

Outlook and guidance

• On track to achieve FY27 goals, targeting a 15% EBIT margin and above-peer growth, with large European telecom deal ramping up in FY27.

• Deal pipeline remains strong, with focus on large strategic clients and AI-led transformation.

• Manufacturing and retail expected to sustain growth; BFSI to recover as seasonal factors normalize.