Tech Mahindra, a global leader in technology and digital services, has made headlines with a 153% year-over-year surge in profit after tax (PAT), hitting Rs 1,250 crore in the latest quarterly earnings ending September 2024. Riding on strategic deal wins and increased operational efficiencies, the company also declared an interim dividend of Rs 15 per share, which analysts say signals strong cash flow and robust future growth.

This performance boost comes amid a promising trajectory in Tech Mahindra’s share price, which climbed to a near-record Rs 1,761.85 in October before settling at Rs 1,716.45. This stock price upswing reflects investor confidence as the company posted a 50.58% growth over the past year. Market analysts highlighted Tech Mahindra’s alignment with evolving tech demands and operational improvements, emphasizing that the company’s earnings exceeded market expectations by a substantial margin.

Financial performance highlights strong growth

During the quarter, Tech Mahindra’s revenue increased by 3.5% year-over-year to Rs 13,313 crore, with a notable rise in earnings before interest, taxes, depreciation, and amortization (EBITDA), which reached Rs 1,750 crore. The EBITDA margin, now at 13.1%, climbed 480 basis points compared to last year, further bolstered by a USD 603 million in total contract value (TCV) from recent deal wins. Free cash flow stood at USD 157 million, underlining the company’s liquidity and capacity to invest in future initiatives.

New strategic wins fuel growth in key sectors

The quarter saw Tech Mahindra secure several high-profile deals. The company initiated a major AI-Ops partnership with a top U.S.-based cards and payments company, entering into a role as the “Change the Bank” partner. Other notable wins included collaborations with European and Canadian telecommunications firms to drive digital transformation through AI, autonomous operations, and managed services. Additionally, Tech Mahindra’s newly launched VerifAI solution addresses growing demand for AI project validation, which is anticipated to provide an edge in large-scale enterprise AI deployments.

The company’s growing influence in AI and telecommunications was a key driver in recent strategic moves, including partnerships with Microsoft to enhance workplace automation and with Temenos for core banking solutions tailored to electronic money institutions in Europe.

Expert opinions underscore consistent growth trajectory

Industry analysts and Tech Mahindra’s CFO, Rohit Anand, emphasized the company’s consistent growth, particularly in high-value deals and strategic sectors like AI and telecommunications. They noted that the dividend aligns with Tech Mahindra’s capital allocation policy and underscores its commitment to shareholder value, even as the broader IT services industry navigates a challenging landscape.

As Tech Mahindra continues to expand its workforce, now totaling 154,273 employees, it has also bolstered its brand presence in global markets, establishing a new business process services center in Riga, Latvia.

With strategic partnerships and technological advancements in AI and cloud services, Tech Mahindra is set to leverage these achievements to meet ambitious targets for FY27.

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