Tech Mahindra lifts margin again, but stays below IT peer median
Costs grew slower than revenue YoY, while the higher tax rate limited the conversion of operating gains into net profit.
Filed 15 Oct 2026, 16:57 IST · after market close · Tech Mahindra Ltd (TECHM)
Key takeaways
- Consolidated operating margin has risen in every quarter shown, reaching 17.79% as Q2FY27 expenses grew +12.47% YoY against revenue growth of +15.61%.
- Net profit increased +33.95% YoY to Rs 1,609.7 cr, but the tax rate rose 2.31 percentage points to 29.89% and other income represented -0.32% of pre-tax profit.
- Tech Mahindra reported Q2FY27 total contract value deal wins of $1,023 million, while management said wins had exceeded $1 billion in each of the last four quarters.
Price around the results
Margin expansion extends into Q2FY27
Consolidated operating margin expanded 0.34 percentage points sequentially because revenue grew +2.98% while expenses rose +2.56%. The YoY improvement was larger at 2.30 percentage points, with revenue up +15.61% and expenses up +12.47%. The supplied trend shows margin improving from 14.49% in Q1FY26 to 17.79% in Q2FY27.
Tax rose as peer gap remained
Sequential profit conversion benefited from a -24.89% fall in interest costs, but the tax rate increased 2.68 percentage points to 29.89%. Other income was negative and contributed -0.32% of pre-tax profit, so reported earnings were not supported by an ancillary-income gain. Tech Mahindra's 17.79% operating margin was 1.86 percentage points below the 19.65% median for five Information Technology peers that had reported, placing it second from the bottom.
Deal wins and AI initiatives support the business narrative
Management said the company had sustained 7.2% YoY constant-currency growth and recorded more than $1 billion of deal wins in each of the last four quarters. It reported Q2FY27 TCV wins of $1,023 million, including a five-year managed-services engagement with a leading Australian telecom operator. The presentation also said Tech Mahindra had expanded its Google Cloud agentic-AI programme to more than 12,500 associates and launched initiatives including Zero Gravity Telco Architecture.
After-close filing leaves market reaction pending
The consolidated results were filed after market close, so no post-result market reaction is covered yet. Across eight recent result reactions, the stock rose five times and fell three times, with a median absolute move of 2.55%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹16,180 cr | ₹15,712 cr | +2.98% | +15.61% |
| Other income | ₹-7 cr | ₹-111 cr | +93.32% | — |
| Expenses | ₹13,302 cr | ₹12,969 cr | +2.56% | +12.47% |
| Operating profit | ₹2,879 cr | ₹2,743 cr | +4.96% | +32.77% |
| Operating margin (%) | 17.79% | 17.45% | — | — |
| Interest | ₹84 cr | ₹111 cr | -24.89% | +8.29% |
| Depreciation | ₹491 cr | ₹479 cr | +2.67% | +4.84% |
| Profit before tax | ₹2,296 cr | ₹2,042 cr | +12.45% | +38.38% |
| Tax | ₹686 cr | ₹556 cr | +23.54% | +50.00% |
| Net profit | ₹1,610 cr | ₹1,486 cr | +8.30% | +33.95% |
| EPS (₹) | ₹17.88 | ₹16.53 | +8.17% | +32.64% |
Operating margin of 17.79% compares with a Information Technology sector median of 19.65% across 5 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Margins expanded for the twelfth consecutive quarter, according to Tech Mahindra’s CFO.
Guidance & outlook
- Tech Mahindra reported deal wins exceeding $1 billion in each of the last four quarters.
- Tech Mahindra said it continues to sustain business momentum with 7.2% year-on-year constant currency growth.
Expansion
- Tech Mahindra expanded its agentic AI readiness with Google Cloud and rolled out Build with Gemini to more than 12,500 associates.
New orders
- Tech Mahindra reported total contract value deal wins of $1,023 million in Q2 FY27.
- A leading Australian telecom operator selected Tech Mahindra for a five-year managed services engagement.
New initiatives
- Tech Mahindra launched Zero Gravity Telco Architecture to support telecom operators’ transition to AI-native operations.
- Tech Mahindra announced a partnership with SpaceXAI to build a global AI-powered software engineering practice.
- Tech Mahindra partnered with I-HUB Quantum Technology Foundation to advance India’s indigenous quantum computing capabilities.
- Tech Mahindra launched the 30-billion-parameter Indus Terra educational LLM with Nvidia and AWS.
- Tech Mahindra launched the Consumer Agentic Experience Studio to help enterprises scale AI-led transformation.
- Tech Mahindra launched an AWS Agentic Process Transformation Centre of Excellence.
- Tech Mahindra partnered with Cisco to deliver an AI-driven Security Service Edge offering for global enterprises.
- Tech Mahindra and Uniphore are establishing an Agentic AI Factory to accelerate enterprise AI adoption at scale.
What to watch
- Whether operating margin holds above 17.79% after the latest 0.34-percentage-point sequential expansion.
- Whether revenue growth remains ahead of expense growth after the Q2FY27 gap of +2.98% versus +2.56% sequentially.
- The next reported TCV figure relative to the Q2FY27 level of $1,023 million.