Tech Mahindra, a key player within the Mahindra Group founded in 1945, exemplifies continual evolution in the IT services landscape. With over 260,000 employees across more than 100 countries and a leading global presence in farm equipment, automotive utility vehicles, IT, financial services, renewable energy, and real estate, the conglomerate retains strength and global reach. Tech Mahindra Limited, its digital arm, contributes to this legacy, operating as a ~$6 billion enterprise with over 140,000 professionals serving Fortune 500 clients worldwide.
Business Model & Revenue Segmentation
Tech Mahindra generates revenues primarily from IT and IT-enabled services tailored for diverse global markets and industries. Their portfolio spans network services, engineering, experience design, digital transformation platforms, cybersecurity, business process outsourcing (BPO), and more. Supported by the NXT.NOW framework, the company aims to enrich human-centric experiences and foster collaborative disruption across its portfolio.
2024–25 Milestones & Innovations
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TechM VerifAI Launch (Q1 FY25): A comprehensive suite for verifying and validating AI/Gen-AI project outcomes, enabling scalable and reliable AI deployment across enterprises.
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TechM Consulting Launch (Q4 FY25): Bolstering consulting capabilities across key industry verticals – a strategic play to deepen domain expertise and deliver end-to-end digital transformation.
Acquisitions Fueling Growth
Tech Mahindra invested $900 million in ten strategic acquisitions during FY22, enhancing capabilities in cloud, digital engineering, CX, and BPS. A significant acquisition was Orchid Cybertech Services, Philippines-based and acquired for AUD 5 million (₹30 crore) in February 2024, boosting telecom customer‑experience services (March revenue ~₹38 crore).
Segment-wise Revenue Overview (FY25)
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Communications: 33%
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Manufacturing: 16%
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Banking, Financial Services & Insurance (BFSI): 17%
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Technology & Media/Entertainment: 14%
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Retail, Transport & Logistics: 8%
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Healthcare: 8%
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Others: 4%
Geographic Revenue Distribution (FY25)
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North America: 51%
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Europe: 24%
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Rest of the World: 25%
FY25 Financial Performance
Sales Growth
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Revenue: ₹52,988 crore (~$6.4B), +2% YoY; +0.3% constant currency
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Sequential Q4: ₹13,384 crore, +4% YoY and +0.8% QoQ
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New TCV: $2.7 billion (+43% YoY)
Notes:
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Revenue rationalization dampened growth by ~1%
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Communications declined ~5% (stabilizing vs. 12% decline in FY24)
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Manufacturing down ~2% due to auto-sector softness
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Other verticals posted robust growth; Asia‑Pacific & Japan led regional expansion
EBITDA & Profitability
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EBITDA (FY25): ₹6,964 crore (+55% YoY), thanks to Project Fortius and operational efficiency
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Subcontracting costs: –13%; Employee costs: +2%; Other expenses: –6%
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PAT: ₹4,244 crore (+77% YoY)
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Forex loss: ₹238 crore vs. ₹42 crore prior year; one-off land-sale gain: ₹450 crore
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EBITDA margin: 13.14% (+447 bps)
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PAT margin: ~8% (vs. 4.6% in FY24); adjusted margin: ~7.4%
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ROCE: ~20%; ROE: ~16%
Efficiency & Cash Flow
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CFO inflow: ₹5,786 crore
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Investing cash flow: ₹12 crore net inflow
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FCF: $613 million (~₹49,000 crore), FCF/share: ₹59.3
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Working Capital Days: Sales outstanding improved to 88 days; overall cycle: 79 days
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Asset Turnover: 1.25×
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Headcount: 148,731 (+3,276); attrition: 12% (vs. 10% prior year); utilization: ~86%
Solvency Metrics
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Debt/Equity: 0.02× (Total debt: ₹471 crore)
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Interest Coverage: 18.6×
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Current Ratio: ~1.87
Return to Shareholder
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TTM P/E: 38.9× (vs. industry ~28.2×)
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Dividend yield: ₹45 per share (85% cumulative FCF payout over 5 years target)
Stock Technical Levels
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Consolidated at ₹625–825 range, fell to ₹470 in March 2020
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Peaked at ~₹1,838 in December 2021; consolidation at ₹1,000–1,200; recent high ~₹1,807 in December 2024
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Support zone identified at ₹1,000–1,100
Management & Governance
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Mohit Joshi appointed MD & CEO (effective 20 June 2023), previous Infosys veteran, brings extensive BFSI and international experience
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COO Atul Soneja also joined from Infosys, current vertical lead with 28+ years of experience
Promoter & Institutional Holdings
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Promoter: 35.01% (Mahindra & Mahindra Ltd – 25.33%)
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FII: 22.95%; DII: 32.28%; Retail/NI: ~9.77%
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Top public/shareholders include:
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LIC of India: 10.14%
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SBI Nifty 50 ETF: 3.91%
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Others: Kotak, ICICI, Aditya Birla, UTI, First Sentier, NPS Trust, GPF, Tata Digital
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Growth Edge Meter Summary
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Profitability Edge: Strong PAT/EBITDA margins, ROCE/ROE improvement
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Efficiency Edge: Healthy cash flows, improved working capital, stable utilization
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Solvency Edge: Virtually zero leverage, robust interest coverage, sound liquidity
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Valuation Edge: Relatively premium P/E, solid dividend yield, strong technical support base
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Quality Edge: Strategic leadership, international pedigree, strong governance
Strategic Industry Trends
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Global IT spending increasingly shifting toward emerging technologies: AI, cloud, IoT, analytics, hyper-automation
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FY27 forecasts: BFSI IT spend > $1.3 T; communications/media/entertainment > $885 B; healthcare > $350 B
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Enterprises expected to raise digital tech investment from ~3% of revenue to 5% by 2030; public cloud to reach 51% of IT spend by FY26
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Statista projects global AI market at $184 B in 2024, growing to $827 B by 2030
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Blockchain market expected to expand from $20 B (2024) to $250 B by 2029
These tailwinds potentiate Tech Mahindra’s positioning as a reliable partner in the digital era.
Competitive Positioning & Future Outlook
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Communications vertical offers differentiation via 5G, network engineering, and CX capability
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Growth anchored in transformation, Cloud & network services, supply chain automation, digital experience, and engineering
FY26–27 Roadmap
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Turnaround Phase (FY25): Organizational reset, strategic investments, winning 45+ high-value clients, covering 162 Fortune 500, deepening AI, streamlining cost structures with Project Fortius
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Stabilization (FY26): Continue investments, integrate acquisitions, drive cost efficiency
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Reaping Rewards (FY27): Harvest returns via improved structural mix, pyramid optimization, productivity, and profitability
Three Focus Strategies:
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Growth: Balanced industry mix, priority markets, large transformational deals, service lines including digital engineering, cloud, next-gen tech; account-centricity for top clients
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Margin: Improve pyramid structure, reduce subcontracting, enhance offshoring, automate, adopt fixed-price models, integrate portfolio synergy
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Organization: Invest in talent, innovation culture, quality processes
Project Fortius Impact: Annual savings ~$250M by FY27. Other levers: utilization improvement, realization optimization.
Metric Tracking: Growth in $20M+ client accounts, geographic distribution, vertical mix, margin/return targets, headcount pyramid, AI skills infusion
Outlook Summary
Tech Mahindra is emerging from a successful turnaround phase, entering stability and poised to reap rewards in FY27. With strong profitability, cash flow, and strategic execution, it targets:
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Revenue & margin leadership in the industry
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~15% EBIT margin by FY27
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ROCE > 30%
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Shareholder return of ~85% FCF
Continued investments in AI, cloud, digital engineering, and platform-based solutions should bolster its position in the digital transformation race.
Company Link:
For more details and investor updates, visit Tech Mahindra Limited.
Conclusion
Tech Mahindra has laid a solid foundation via disciplined financial management, technological investments, and strategic leadership to harness emerging digital trends. Its NXT.NOW framework, coupled with Project Fortius and targeted M&A, offers a compelling narrative as it transitions to a high-growth, high-efficiency model aimed at delivering superior value for clients and shareholders.
With a strong roadmap for FY27, the company seeks to cement its status among top-tier IT services players globally—fueled by next-gen technologies including 5G, AI, quantum, blockchain, and cloud transformation.
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