Tech Mahindra (TECHM) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 revenue was $1.559 billion (₹130,055 million), up 0.7% QoQ (1.0% in INR) and down 2.6% YoY in USD (1.2% in INR).

• EBIT margin expanded to 8.5%, up 170 bps YoY and 110 bps QoQ; PAT margin rose to 6.5%.

• Net new deal wins totaled $534 million, with notable wins in telecom, healthcare, and automotive.

• Strategic transformation initiatives, including organizational restructuring, new service line alignment, and AI innovation, are progressing well.

• The company is in early stages of a multi-year turnaround, focusing on growth, margin improvement, and talent transformation.

Financial highlights

• EBIT for the quarter was $132 million, up 16.2% QoQ and 22% YoY; PAT at $102 million, up 28.6% QoQ and 21.3% YoY.

• Free cash flow was $106 million, 104% of PAT; cash and equivalents at quarter-end were $966 million.

• Gross profit at $414 million; diluted EPS at Rs 9.60.

• DSO including unbilled was 93 days, improving by 5 days YoY.

• Tax rate reduced to 26.6% from 30.7% in the previous quarter.

Outlook and guidance

• Management expects a better year compared to the previous one, with continued focus on long-term sustainable growth and is on track to achieve FY27 goals.

• Demand environment remains stable; any improvement could provide upside to margins.

• Wage hikes are deferred for now, to be revisited in the second half of the year.