Tech Mahindra Q4FY26 Results: Transformation Momentum Strengthens

Tech Mahindra's Q4FY26 results represent a meaningful milestone in the company's ongoing three-year transformation journey. Across revenue, margins, deal wins, and AI adoption, the quarter reflects early but increasingly tangible signs of execution-led recovery. Here is our detailed breakdown of the quarter and what the numbers tell us about the road ahead.

Q4FY26 & FY26: Headline Numbers

For Q4FY26, Tech Mahindra reported revenue of US$1,625 million, up 0.9% sequentially and 4.9% year-on-year. In constant currency terms, growth came in at 0.6% QoQ and 2.4% YoY. In rupee terms, quarterly revenue stood at ₹15,076 crore, up 4.7% QoQ and 12.6% YoY.

For the full year FY26, revenue came in at US$6,385 million, up 1.9% YoY (0.6% YoY in constant currency terms).

EBIT margin for Q4FY26 expanded by approximately 70 bps QoQ and 330 bps YoY, reaching 13.8% — the tenth consecutive quarter of margin expansion. For FY26 as a whole, EBIT margin improved by approximately 290 bps YoY to 12.6%.

Reported PAT for Q4FY26 stood at ₹1,354 crore, up 20.7% QoQ and 16% YoY. Adjusted PAT (excluding a one-off from the new labour code) was down 2.9% QoQ. For FY26, PAT stood at ₹4,811 crore, up 13.2% YoY; adjusted for the labour code impact, PAT growth was 19.6% YoY.

The company declared a final dividend of ₹36 per share, taking the full-year dividend to ₹51 per share.

Deal Wins: Record Year, Strong Pipeline

Deal momentum remains one of the strongest positives from this quarter and the full year. TechM won a new deal TCV of US$1,073 million in Q4FY26, down 2.1% QoQ but up 34.5% YoY — well above the four-quarter average of US$880 million.

For FY26 as a whole, total contract value (TCV) came in at US$3.79 billion, up 42% YoY — the highest deal win in the past five years. The quarter included two mega deals and a five-year strategic partnership with Orange Business. AI-led deal participation is increasing, improving TechM's positioning as a transformation partner.

The deal pipeline is increasingly weighted toward BFSI and healthcare, and the margin gap between time-and-material and fixed-price contracts — currently around 8% — continues to narrow, with room for further improvement.

Client mining metrics also strengthened: US$50 million+ clients rose to 29, and US$20 million+ clients stood at 66.

Geography and Segment Performance

Geography (QoQ): Europe (25.6% of revenue mix) and Rest of World (23.9%) each grew 2.7% sequentially. Americas (40.5% of mix) declined 0.8% QoQ.

Segment performance (QoQ): BFSI (15.5% of mix) was the standout, growing 8% sequentially. Hi-Tech & Media (13%) grew 2.5% and Communications (33%) grew 1.8%. Manufacturing (18%), Retail, Transport & Logistics (8.7%), Healthcare & Life Sciences (7.4%) and Others (3.7%) declined by 0.1%, 5.3%, 0.8% and 20% respectively.

Here is a more granular view of each vertical

Retail was the fastest-growing vertical on a YoY basis. Key drivers include logistics tailwinds from e-commerce and warehousing, integrated design capabilities via Pininfarina, and focused client mining. Management expects momentum to continue into FY27.

Manufacturing was the core growth driver through FY26. Strength in aerospace and defence offset softness in US auto. Organic improvement is expected to continue in FY27, with the pipeline carrying meaningful manufacturing exposure.

BFSI is characterised by management as a deliberate investment area. Traction in asset and wealth management and core platforms is building. New client inroads and sub-domain depth across payments, insurance and wealth are expected to drive acceleration in FY27, supplemented by external industry expert hires.

Telecom was supported by Comviva seasonality in Q4, with Comviva delivering double-digit growth for the full year. Management firmly addressed leadership and concentration concerns, pointing to structural resilience via diversification across IT, BPS, network services, and Comviva across 100+ global telecom clients.

Hi-Tech faced semiconductor-related headwinds in H1 but recovered in H2.

Healthcare continues to navigate regulatory challenges across the provider and life sciences segments, with gradual improvement visible in payer clients.

Margin Drivers: Project Fortius and Structural Levers

The 70 bps QoQ and 330 bps YoY expansion in Q4 EBIT margin to 13.8% was driven by three primary factors: Project Fortius (TechM's internal cost transformation programme), FX tailwinds, and Comviva seasonality. This expansion was achieved despite continued investments in AI capabilities and the absorption of transition costs on large deals — a combination that underscores the structural rather than cyclical nature of the improvement.

Looking at the levers ahead, management has identified AI-led productivity gains of approximately 7%, better fixed-price execution, pyramid optimisation, and a favourable mix shift toward high-value services as the key drivers of further margin expansion. Management reiterated an aspiration to reach approximately 15% EBIT margin over the next 12 months, with this target largely dependent on internal cost optimisations rather than revenue acceleration.

A useful datapoint on margin quality: the margin gap between T&M and fixed-price contracts stands at approximately 8%, and while it has been narrowing, further improvement here represents an additional structural tailwind.

AI: "AI Delivered Right" — Strategy, Metrics and Monetisation

AI is no longer a peripheral narrative at TechM — it is central to both the cost and revenue story.

Management articulated an "AI Delivered Right" philosophy, positioning TechM as a bridge between legacy technology estates and the new AI-led stack. The company has built out this capability systematically:

80% of talent trained in AI; AI Certified Talent stands at 76%
350+ service-specific AI agents created leveraging the Orion platform
~95% of Turbocharge clients infused with GenAI/AI offerings
7% improvement in revenue per employee over FY25, led by AI
2 proprietary LLMs developed, including an education-focused LLM launched in February 2026 under the IndiaAI Mission, built using NVIDIA's AI stack (NeMo and NIM microservices)
TechM holds 90% of the top 2 AI-related analyst leadership positions per external rankings

Perhaps the most significant strategic signal from this quarter is the introduction of a new outcome-based commercial model: TechM is moving away from a simple AI productivity pass-back framework toward a "service token" model, where pricing is based on a combination of human and AI agent service units delivered. This is a meaningful shift in how AI value is captured commercially.

TechM was also recognised as among the fastest growing "Run" and "Change" partners in Gartner EMQ.

Headcount and Attrition

Total headcount decreased by 1,993 employees to 1,47,623 in Q4FY26. The attrition rate stood at 12.1%, down approximately 20 bps QoQ — a continued moderating trend. TechM added 6,000 freshers in FY25 and 950 in FY26, with plans to increase fresher hiring in FY27 relative to last year.

FY27 Outlook: Management's Guidance

Management has highlighted FY27 as a pivotal year in TechM's transformation journey, with three core commitments:

Revenue growth ahead of the industry average (industry estimated at approximately 2–5% CC growth), driven by large deal ramp-ups already won in FY26
EBIT margin aspiration of approximately 15% over the next 12 months, primarily through internal cost optimisation
Free cash flow conversion exceeding 85%

The strategic levers for FY27 include deepening client relationships and wallet share, tuck-in acquisitions, scaling high-growth service lines (Engineering, Cloud, Data & AI, Consulting), GenAI-led automation for continued margin expansion, and large deal ramp-ups.

Key Financial Estimates (FY26–FY28E)

Metric	FY26	FY27E	FY28E
Net Sales (₹ crore)	56,815	61,298	64,984
EBIT (₹ crore)	7,153	8,827	9,618
EBIT Margin (%)	12.6	14.4	14.8
Adjusted PAT (₹ crore)	5,083	6,665	7,454
EPS (₹)	57.3	75.4	84.3
RoNW (%)	17.2	20.5	20.6
RoCE (%)	20.6	24.6	24.9

We expect US dollar revenue to grow at a CAGR of approximately 5.2% over FY26–28E, with EBIT margins of 14.4% and 14.8% for FY27E and FY28E respectively.

Key Risks

Two risks merit monitoring: first, lower-than-expected revenue growth and margin expansion — particularly if macro headwinds intensify or deal ramp-ups are delayed. Second, slower-than-expected TCV-to-revenue conversion — TechM's record FY26 deal wins are a strong indicator, but the conversion timeline on large, complex transformation deals can be uneven.

Frequently Asked Questions (FAQs)

Q1. What was Tech Mahindra's revenue in Q4FY26? TechM reported Q4FY26 revenue of US$1,625 million, up 0.9% QoQ and 4.9% YoY. In rupee terms, this was ₹15,076 crore, up 4.7% QoQ and 12.6% YoY.

Q2. How did EBIT margins perform in Q4FY26? EBIT margin expanded by approximately 70 bps QoQ and 330 bps YoY to 13.8% in Q4FY26 — the tenth consecutive quarter of margin expansion. For FY26 as a whole, EBIT margin improved by ~290 bps YoY to 12.6%.

Q3. What were Tech Mahindra's deal wins for FY26? FY26 TCV came in at US$3.79 billion, up 42% YoY — the highest deal win in the past five years. Q4FY26 alone saw new deal TCV of US$1,073 million, up 34.5% YoY.

Q4. What is the management's margin aspiration for FY27? Management has reiterated an aspiration of approximately 15% EBIT margin over the next 12 months. Importantly, this is targeted to be achieved primarily through internal cost optimisations — including AI-led productivity gains of approximately 7% — rather than being contingent on strong revenue growth.

Q5. What is TechM's AI strategy and how advanced is the rollout? TechM's "AI Delivered Right" philosophy positions it as a bridge between legacy IT and new AI-led architectures. 80% of talent is trained in AI, 350+ service-specific agents have been created, and approximately 95% of Turbocharge clients have been infused with GenAI offerings. Revenue per employee improved 7% in FY25 due to AI. The company has also introduced a new "service token" outcome-based commercial model for AI-delivered services.

Q6. Which verticals are growing and which are under pressure? Retail is the fastest-growing vertical on a YoY basis. Manufacturing (led by aerospace and defence) and Communications (supported by Comviva) are resilient. BFSI is being actively invested in. Hi-Tech recovered in H2 after semicon-related weakness in H1. Healthcare continues to face regulatory headwinds, with gradual improvement in payer clients.

Q7. What is the attrition trend at TechM? Attrition stood at 12.1% in Q4FY26, down approximately 20 bps QoQ, continuing a moderating trend. Total headcount was 1,47,623 as of Q4FY26.

Q8. What dividend has Tech Mahindra declared for FY26? The company declared a final dividend of ₹36 per share in Q4FY26, taking the total FY26 dividend to ₹51 per share.

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