Tech Mahindra (TECHM) Q3 24/25 earnings summary

Executive summary

• Q3 FY25 revenue was $1.567 billion (₹132,856 million), up 1.3% YoY in constant currency but down 0.4% YoY and 1.3% sequentially due to currency headwinds.

• EBIT margin improved to 10.2%, up 480 bps YoY and 60 bps sequentially; PAT margin at 7.4%, up 350 bps YoY.

• Net new deal wins reached $745 million, with large, multi-year contracts across telecom, hi-tech, automotive, chemicals, BFSI, and healthcare.

• Free cash flow was $199 million, with cash and equivalents at $799 million (₹6,841 crores).

• Major investments in GenAI, AI, and automation, including TechM agentX and a Center of Excellence with NVIDIA, plus strategic partnerships with AWS, ServiceNow, and others.

Financial highlights

• Revenue from operations for Q3 FY25 was ₹132,856 million ($1.567 billion), with gross profit of ₹38,297 million and EBITDA of ₹18,090 million.

• EBIT for the quarter was $159 million (₹1,350 crore), up 4% sequentially and 88.1% YoY; EBIT margin at 10.2%.

• PAT was $116 million (₹983 crore), up 88.5% YoY, with a margin of 7.4%.

• Free cash flow conversion was robust at 172% of PAT; DSO improved to 88 days, down 6 days QoQ and 3 days YoY.

• Hedge book at $2.1 billion, with a mark-to-market loss of $4.7 million.

Outlook and guidance

• Management expects continued margin expansion and robust deal momentum to support long-term goals, targeting 15% EBIT by FY27.

• 2025 is expected to show incremental improvement over 2024, with no major macro shifts but a positive trajectory.

• Wage hikes in Q4 are expected to impact margins by 1-1.5%, but operational levers and automation are expected to offset this over time.