Tech Mahindra’s profit after tax (PAT) rose 23.2% year on year to $166 million in the second quarter of FY27. The company won $1.023 billion in new deals in the quarter, up 25.4% from a year earlier. Deal wins over the past 12 months rose 34.8% from the same period a year before. On the earnings call, CEO and Managing Director Mohit Joshi said almost all of the company’s large deals include AI.
Revenue Growth
Revenue for the quarter ended 30 September 2026 rose 7.2% year on year in constant currency to $1.693 billion. It grew 2.4% from the previous quarter in constant currency. In rupee terms, revenue was ₹16,180 crore, up 15.6% year on year.
Margins Keep Widening
EBIT margin rose 40 basis points from the previous quarter to 14.8%. Tech Mahindra said this was its 12th straight quarter of margin expansion.
Chief Financial Officer Rohit Anand said strong volume growth and project cost savings drove the gain. Wage hikes partly offset it. The company repeated its target of a 15% EBIT margin for FY27.
AI Across the Business
Joshi said Tech Mahindra is building an AI tool chain for every business and service line. It is also drawing up industry-specific transformation roadmaps for sectors such as telecommunications, financial services and manufacturing.
During the call, the company said it has launched Indus Terra, an education-focused language model for students in Grades 2 to 12. It has 30 billion parameters and was built with NVIDIA and AWS as part of the IndiaAI Mission. In September, Tech Mahindra partnered with Infinite Uptime to apply physical AI in manufacturing.
How the Verticals Performed
On a year-on-year basis, the communications business grew 9.5%. Large-deal ramp-ups and new engagements supported it. Retail, travel and logistics revenue rose 9.2%, and manufacturing grew 7%. High technology rose 6.7% and healthcare grew 6.2%. Banking and financial services increased 4.6%.
Cash Flow and Tax
Free cash flow was $135 million for the quarter. Management said the ramp-up of new deals affected quarterly cash flow. It expects the impact to ease in the next quarter. Anand repeated the target of converting 90% to 100% of PAT into free cash flow for the full year.
The effective tax rate was 29.9%, which reflects a one-time adjustment tied to a prior-period tax matter. Without that adjustment, the rate was 26.6%.
Dividend and Bonus Issue
The board declared an interim dividend of ₹15 per equity share with a face value of ₹5. It also approved a 1:1 bonus issue. Shareholders will receive one extra share for every share they hold, subject to applicable terms and conditions.
