Tech Mahindra Q2 results

Tech Mahindra’s Q2 Net Profit Soars: Strategic Transformation Drives Growth in Key Markets

Tech Mahindra, one of India’s leading IT services giants, stunned the market with a more than two-fold surge in its net profit for the July-September quarter. The company reported consolidated net profits of ₹1,250 crore, a significant leap from the ₹493.9 crore posted during the same period last year. This growth, driven by special income from asset sales and a solid performance in European and non-American markets, has positioned Tech Mahindra as a force to watch in the global IT landscape.

Strong Financial Performance and Revenue Growth

For the second quarter of FY25, Tech Mahindra’s revenue grew 3.49%, reaching ₹13,313.2 crore, compared to ₹12,863.9 crore in the corresponding quarter of the previous fiscal year. A major factor behind this stellar profit growth was the sale of freehold land and associated buildings, which contributed ₹4,502 million in gains. The deal, valued at ₹5,350 million, will be paid over four years with an interest rate of 8.2% p.a.

On a sequential basis, the company saw a 46.81% jump in net profit and a 2.36% rise in revenue. Despite global IT services facing a slowdown, Tech Mahindra’s strategic transformation initiatives have begun paying off.

CEO’s Strategic Vision: Project Fortius

Mohit Joshi, Tech Mahindra’s CEO, emphasized the company’s commitment to strategic improvement, even in a challenging industry environment. In April, he unveiled Project Fortius, a bold, three-year plan aiming to double the company’s operating margins to 15% by FY27 through organic growth and operational excellence.

“We’ve focused on deepening client relationships, expanding our partner ecosystem, and maintaining a sharp focus on execution. These efforts have resulted in margin expansion for the third consecutive quarter,” Joshi stated.

Despite facing headwinds in its communications segment, which contributes a third of Tech Mahindra’s total revenue, the company is making strides in other areas. The BFSI segment posted 4.5% revenue growth, while the Hi-Tech and Media segment saw a 2.4% increase. Europe and the Rest of World market posted growth rates of 4.1% and 9.7%, respectively.

Strategic Deal Wins and Focus on Operational Excellence

Tech Mahindra’s order bookings, or TCV (Total Contract Value), amounted to USD 603 million in Q2 FY25, slightly down from USD 640 million in the same quarter last year. However, the company remains optimistic about its future growth trajectory, driven by its Scale at Speed strategy, which has resonated well with its global clients.

Chief Financial Officer Rohit Anand highlighted that the company is on track with its capital allocation policy, declaring an interim dividend of ₹15 per share. “This quarter has been about increasing deal wins, revenue growth, cost optimization, and generating steady free cash flow,” Anand noted.

Investments in AI and Future Skilling

Joshi also outlined the company’s investment strategy in emerging technologies and future-proof skill sets. The focus is on AI-first and cloud-first capabilities, with particular attention to fresh talent through Tech Mahindra’s expanding fresher hiring program.

“We are building a high-performance culture, emphasizing clarity, innovation, and a future-ready workforce. This investment in skilling and technical specializations is essential for our long-term growth,” Joshi added.

Volatility Ahead, but a Long-Term Positive Outlook

Despite Tech Mahindra’s strong Q2 results, Joshi cautioned that the company is still in the early stages of its turnaround journey. The next few quarters could bring volatility, particularly in the telecommunications and BFSI sectors. However, he expressed confidence in the company’s ability to navigate these challenges and emerge stronger, thanks to a unified leadership team and a clear strategic roadmap.

Shares of Tech Mahindra settled at ₹1,688 on the BSE on Friday, down 0.68% from the previous close, reflecting some market caution. However, with solid fundamentals, strategic investments, and a focus on operational excellence, Tech Mahindra appears well-positioned for future success.

Conclusion:

Tech Mahindra’s remarkable Q2 performance, driven by strategic asset sales and a robust presence in key global markets, shows the company’s resilience and forward-thinking leadership. While the company faces challenges in its communications segment, its focused investments in AI, cloud, and future-ready skills are likely to propel growth in the long term. With Project Fortius steering the ship towards higher margins, Tech Mahindra is on a solid path toward sustainable, profitable growth. Tech Mahindra Q2 results, Investors and stakeholders alike will be watching closely as the company navigates its ambitious roadmap for FY27 and beyond.

FAQs:

1.How much did Tech Mahindra’s net profit rise in Q2 FY25?

A. Tech Mahindra’s net profit more than doubled to ₹1,250 crore in Q2 FY25 from ₹493.9 crore in the same period last year.

2.What is Project Fortius?

A. Project Fortius is a three-year plan by Tech Mahindra to achieve a 15% operating margin by FY27, focusing on organic growth and operational excellence.

3.What is driving Tech Mahindra’s revenue growth?

A. Growth in European and non-American markets, along with the BFSI segment and asset sales, contributed to the company’s Q2 revenue growth.

4.What is Tech Mahindra’s Total Contract Value (TCV) in Q2 FY25?

A. The company’s TCV stood at USD 603 million in Q2 FY25, slightly down from USD 640 million in the same period last year.

5.How has Tech Mahindra performed in the BFSI segment?

A. The BFSI segment recorded a 4.5% revenue growth in Q2 FY25, a key driver for the company’s overall performance.

6.What challenges is Tech Mahindra facing in its communications segment?

A. The communications segment, which accounts for a third of Tech Mahindra’s revenue, has been underperforming, adding some volatility to the company’s outlook.

7.What is the significance of Tech Mahindra’s asset sale?

A. The sale of freehold land and related assets contributed ₹4,502 million to Tech Mahindra’s Q2 profits, with the total deal valued at ₹5,350 million.

8.What investments is Tech Mahindra making in AI?

A. Tech Mahindra is heavily investing in AI-first and cloud-first capabilities, as well as expanding its fresher hiring program to build future-ready skills.