Tech Mahindra Share Price Slips Even After Posting 34% YoY Profit Growth

IT major Tech Mahindra's share price slipped more than 2 per cent in trade on July 17 after reporting its first quarterly results for the current fiscal year (Q1 FY26).

The IT stock opened with a gap-down at Rs 1,583.40 apiece on the National Stock Exchange (NSE), and slipped to an intraday low of Rs 1,572.30 per share, down 2.21 per cent from previous close of Rs 1,607.90.

With today’s move, the stock has snapped its two-day winning streak. Over the past month, the stock has declined nearly 9 per cent, and year-to-date (YTD), it has yielded a negative return of 8 per cent.

Meanwhile, Nifty IT, the index which tracks the performance of IT sector, saw a decline of 5.2 per cent over the past month and nearly 14 per cent YTD.

Tech Mahindra Q1 Results

The decline came even as the company’s consolidated net profit grew 34 per cent year-on-year (YoY) to Rs 1,141 crore, as against Rs 851 crore in the same period last year.

The company’s consolidated revenue grew 2.7 per cent to Rs 13,351 crore in Q1, up from Rs 13,005 crore a year ago.

Earnings Before Interest and Taxes (EBIT) also saw a jump of 34 per cent YoY to Rs 1,477 crore.

EBIT margin for the quarter came in at 11.1 per cent, up 260 basis points YoY. Free cash flow stood at $86 million. The company reported new deal wins worth $809 million, represented as Total Contract Value (TCV). Cash and cash equivalent at the end of the quarter stood at Rs 8,072 crore.

IT headcount grew to 1,48,517, up by 897 employees YoY.  The company’s attrition rate  rose to 12.6 per cent, up from 11.8 per cent in the previous quarter.

What Brokerages Say

Axis Securities said Tech Mahindra’s Q1 numbers were in line with expectations. The brokerage noted that the overall demand environment is expected to improve in the coming months, especially across key verticals. While the telecom segment has shown signs of stabilisation and growth, there was no major change in the BFSI and other sectors.

The management expects large deal wins to start contributing to revenue from Q2 FY26, provided market conditions remain stable.

From a long-term point of view, Axis Securities believes Tech Mahindra is addressing client-specific challenges across different sectors while maintaining a healthy deal pipeline. It added that the company’s new strategy should help speed up recovery and support near-term growth.

Axis Securities expects FY26 to be better than FY25, backed by strategic steps like adding 15 new “must-have” accounts in Q1, mainly from Global 2000 or Fortune 500 companies, and focusing on increasing profitability through fresh large deal wins.

The management remains positive about improving and scaling up operations. The brokerage also noted that the deal pipeline is strong, especially in the digital space, and said it expects a recovery to start from H2 FY26.

Nuvama Institutional Equities said Tech Mahindra reported a decent performance in Q1 FY26, though some numbers missed estimates.

While Tech Mahindra continues to deliver strong deal momentum, the brokerage said margins are still far from the company’s own guidance, and expanding them further may be challenging due to a weak macro environment and limited room for improvement.

Despite its lower margins and return profile compared to peers, Nuvama noted that Tech Mahindra is trading at valuations similar to other large-cap IT companies. The brokerage has trimmed its FY26 and FY27 earnings estimates by less than 2.5 per cent and continues to value the stock at 19x FY27 estimated earnings.