Tech Mahindra lifts margin, but shares fall more than usual after results
Revenue growth outpaced expenses and extended the margin recovery, while higher taxes and negative other income weighed on profit quality.
Filed 22 Apr 2026, 13:51 IST · Tech Mahindra Ltd (TECHM)
Key takeaways
- Consolidated operating margin expanded 3.27 percentage points year on year to 17.02% as revenue grew faster than expenses.
- Net profit rose 18.78% year on year to Rs 1,356.4 cr, but a 2.24 percentage-point rise in the tax rate limited the conversion of operating gains.
- Tech Mahindra's share price fell 2.55% on results day, more than twice its 1.16% median absolute move after the past eight results.
Price around the results
Revenue momentum extended into Q4FY26
Consolidated revenue grew 12.64% year on year and 4.74% sequentially, with operating profit rising faster at 39.41% and 8.44%, respectively. The year-on-year improvement reflects expenses growing 8.38%, below revenue growth; sequentially, the gap was narrower, with expenses up 4.02% against revenue growth of 4.74%. Net profit grew 18.78% year on year and 21.26% sequentially, below the operating-profit increase because of tax and below-the-line effects.
Margin recovery continued, but profit quality was mixed
Operating margin increased 3.27 percentage points year on year and 0.58 percentage points sequentially because costs grew more slowly than revenue. This was the fifth consecutive quarterly increase in the margin, from 13.62% in Q3FY25 to 17.02% in Q4FY26. The margin remained 2.67 percentage points below the 19.69% median for the 19 Information Technology peers that had reported, placing Tech Mahindra fifth from the bottom. Other income was negative and equivalent to -11.44% of pre-tax profit, while the year-on-year tax rate rose 2.24 percentage points to 24.25%; sequentially, the tax rate fell 1.43 percentage points.
Management points to deal ramp-up and operating fixes
Management said large-deal wins are expected to ramp up over the next 12 months, and reported wins across telecom, BFSI, manufacturing and retail/logistics. The company said it plans to launch TechM XCD and CXC in Pune and pursue tuck-in acquisitions. Management also said it is addressing structural cost overhangs through operational improvements, while highlighting an AI-driven NextGen Service Desk chatbot and a predictive endpoint-visibility solution.
The market reaction was weaker than Tech Mahindra's norm
The stock fell 2.55% on the results day, with a 5.01 times volume ratio, and was down 5.28% on the following session. At five sessions, the decline was 2.73%, compared with a median absolute post-results move of 1.16% across the past eight results. The stock had risen after six of those eight results, making the initial decline an unusually weak response relative to its recent pattern.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹15,076 cr | ₹14,393 cr | +4.74% | +12.64% |
| Other income | ₹-205 cr | ₹-293 cr | +30.15% | — |
| Expenses | ₹12,511 cr | ₹12,028 cr | +4.02% | +8.38% |
| Operating profit | ₹2,565 cr | ₹2,366 cr | +8.44% | +39.41% |
| Operating margin (%) | 17.02% | 16.44% | — | — |
| Interest | ₹89 cr | ₹94 cr | -5.13% | +4.10% |
| Depreciation | ₹481 cr | ₹474 cr | +1.56% | +4.11% |
| Profit before tax | ₹1,791 cr | ₹1,505 cr | +18.97% | +22.29% |
| Tax | ₹434 cr | ₹387 cr | +12.34% | +34.72% |
| Net profit | ₹1,356 cr | ₹1,119 cr | +21.26% | +18.78% |
| EPS (₹) | ₹15.27 | ₹12.66 | +20.62% | +15.95% |
Operating margin of 17.02% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.55% | -1.74% |
| Next session | -5.28% | — |
| 5 sessions | -2.73% | -1.11% |
| 15 sessions | -10.49% | — |
| 30 sessions | -1.15% | — |
Volume on the results session was 5.01× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company expects large-deal wins to ramp up over the next 12 months.
Expansion
- Tech Mahindra plans to launch TechM XCD.
- Tech Mahindra plans to launch CXC in Pune.
- The company plans to pursue tuck-in acquisitions.
New orders
- Tech Mahindra reported large-deal wins across telecom, BFSI, manufacturing and retail/logistics.
New initiatives
- Tech Mahindra introduced an AI-driven NextGen Service Desk chatbot and predictive endpoint visibility solution.
Problems & risks
- The company is addressing structural cost overhangs through operational improvements.
What to watch
- Whether operating margin holds above 17.02% after its fifth consecutive quarterly increase.
- Whether revenue growth remains ahead of expense growth after the Q4FY26 gap of 4.74% versus 4.02%.
- Whether other income remains a drag after reaching -11.44% of pre-tax profit.