Tech Mahindra Q1 net profit jumps 28% YoY to Rs 1,465 crore, revenue up 18%

Strong Profit Growth Defies Market Jitters

Tech Mahindra delivered a robust set of Q1 numbers on Thursday, with net profit climbing 28% year-on-year to Rs 1,465 crore. Revenue for the April-June quarter came in at Rs 13,500 crore, up 18% from the same period last year.

The IT services firm’s performance beat analyst estimates, sending its shares up over 3% in intraday trade on the BSE. The company attributed the growth to strong deal wins in its communications, media, and enterprise verticals.

AI Investments Lift Margins

A key driver of the profit surge was margin expansion, aided by the company’s focus on artificial intelligence and automation. Tech Mahindra has been embedding AI into its service delivery and internal processes, a move that helped improve operational efficiency.

Chief Financial Officer Vivek Agarwal said the company’s AI bets are starting to show results. “We are seeing better utilisation and lower costs in some of our large accounts,” he told analysts on a post-earnings call. Margins for the quarter stood at 15.2%, up 120 basis points sequentially.

Hiring Cycle May Resume

One of the biggest talking points from the earnings announcement was the possibility of a restart in campus hiring. For the past three quarters, Tech Mahindra had paused fresher recruitment due to lack of revenue visibility and an uncertain macroeconomic environment.

CEO C.P. Gurnani indicated that the company is now more confident about the demand pipeline. “We are evaluating campus intake for the next fiscal year. The visibility is improving,” he said. The firm added 2,100 employees in Q1, taking its total headcount to over 1.55 lakh.

Revenue Visibility Still a Concern

Despite the upbeat numbers, analysts remain cautious about the sustainability of the growth. Some pointed out that the revenue beat was partly due to one-time deals and currency tailwinds. The company’s order book stood at $3.2 billion in deal total contract value, a 10% sequential decline.

Industry observers noted that while AI investments are helping margins, the broader IT spending environment remains patchy. Tech Mahindra’s commentary on the BFSI and retail segments was more guarded than expected.

What to Watch in Coming Quarters

Investors will now focus on the pace of deal closures and how soon campus hiring resumes. The company’s ability to sustain margin gains will also be key. Tech Mahindra’s next big test will come when it reports Q2 numbers in October, where analysts will look for evidence that the growth is broad-based and not just a one-quarter spike.