Tech Mahindra, country's fifth largest IT services firm, said first quarter profit rose 6.5 per cent to Rs 798.6 crore as it saw clients spend more on digital deals.
The firm said revenues grew 6 per cent to Rs 7,336.1 crore, beating Street estimates.
The Mumbai-based company reported a profit of Rs 749.3 crore on revenue of Rs 6,921 crore in the same period last year.
Tech Mahindra's revenue in dollars, the currency it bills a majority of its customers, increased 0.6 per cent to $1.14 billion over the previous quarter. Operating margins improved to 12.7 per cent, up 0.70 basis points from the quarter to March.
A Bloomberg estimate expected Tech Mahindra to report profits of Rs 605 crore on revenue of Rs 7268 crore. Analysts had expected margins to be weaker, but a combination of cost rationalisation improved efficiency and focus on more valuable digital deals lifted margins.
"Our June quarter performance reflects that we are moving in the right direction. We continue to realign and reshape our business in line with the market demands," Tech Mahindra vice chairman Vineet Nayyar said.
CEO and managing director CP Gurnani said despite all the headwinds in a seasonally weak quarter, the company's digital business grew ahead of expectations.
"Our performance during the quarter reaffirms the early success of our D.A.V.I.D strategy and the journey we have undertaken to become a leading Digital Transformation Company," Gurnani added.
Indian IT firms have seen a mixed quarter with few firms scoring better than analyst expectations. The firm is still a laggard compared to larger peers such as Infosys, Wipro, HCL Technologies and Tata Consultancy Services.
Tech Mahindra stock closed Rs 5.15 or 1.35 per cent at Rs 385.25 on the Bombay Stock Exchange on Monday.