Tech Mahindra Q2 preview: IT major to see profit uptick led by margin boost

Tech Mahindra Ltd. is expected to post a sequential increase in both revenue and net profit for the quarter ended September, driven by margin expansions and ramp-ups of recently won deals. 

 

Consensus analysts tracked by Business Standard project a 13.3 per cent quarter-on-quarter (Q-o-Q) rise in net profit to ₹1,292.9 crore for the second quarter of FY2026, supported by margin improvement. Revenues are expected to increase 3.5 per cent to ₹13,811 crore. 

On a year-on-year (Y-o-Y) basis, the top and bottom lines are likely to rise by 3.7 per cent and 3.43 per cent, respectively. The Ebit margin for the quarter is expected to rise sequentially, driven by lower subcontracting costs and improved SG&A efficiency, analysts noted.

 

The IT bellwether will report its earnings for the quarter ended September on October 14, Tuesday. Analysts expect deal closures to come around 800 million. 

 

The IT services and consultancy firm's net profit for the June quarter of the current financial year (Q1-FY26) fell 2.2 per cent sequentially to ₹1,140 crore, while its revenue fell 0.25 per cent to ₹13,351 crore. New deal wins for the first quarter were $809 million, up 51.5 per cent from last year. 

 

Investor focus is expected on TechM’s deal-win momentum, growth in financial services, H-1B visa risks, deal pipeline health, revenue retention, and GenAI’s impact on productivity and BPO disruption. 

Here's how analysts of various brokerages expect Tech Mahindra to fare in Q2: 

Kotak Securities: The domestic brokerage expects constant currency (CC) revenue growth of 0.9 per cent, led by financial services and retail, with a stable communications vertical. Ebit margin is forecast to expand 70 basis points, supported by growth leverage and rupee depreciation. 

 

Net-new deal wins are expected at $800 million, stable Q-o-Q and up 33 per cent Y-o-Y, with higher-margin deals driving further margin improvement. Kotak Securities expects the company to exit FY2026 with 13 per cent Ebit margins, with investor focus on the path to 15 per cent profitability in FY2027 amid a challenging macro environment.

 

Motilal Oswal: Analysts expect revenue to grow 1.0 per cent Q-o-Q on a CC basis, driven by ramp-ups from recently won deals. Hi-Tech remains subdued due to weakness at a semiconductor client, though some stability is visible this quarter. BFSI and Retail are expected to drive growth, while Manufacturing (impacted by US Auto) and Communications are likely to remain flat, showing early signs of stabilisation. 

 

Management sees a sustainable total contract value baseline of $600–800 million. Ebit margin is forecast to improve 50 basis points to 11.6 per cent, supported by lower subcontractor costs and SG&A efficiency, with a 13 per cent exit margin projected for FY2026. Key monitorables include margin gains and performance in BFS and CME verticals, particularly in the US, and deal TCV.

 

Nuvama Institutional Equities: TechM is expected to report 0.9 per cent sequential growth in CC (+1.1 per cent in $), with both Telecom and Enterprise businesses showing similar momentum. Ebit margins are forecast to expand 70 basis points Q-o-Q. Management is expected to maintain FY2027 margin guidance of 15 per cent, the brokerage said. Key monitorables include comments on FY27 revenue and margin guidance, and TechM’s progress on initiatives.