Tech Mahindra keeps margin target after quarterly revenue beat

Tech Mahindra (TEML) has reaffirmed its fiscal 2027 operating margin target of 15% following a quarterly revenue beat. The IT services provider reported a 15.6% year-over-year increase in consolidated revenue to 161.80 billion rupees ($1.70 billion) in Q2. Growth was fueled by substantial large deals in communications and other segments.

New deal wins grew by 25.4% year-over-year, reaching $1.02 billion. Tech Mahindra's CEO, Mohit Joshi, emphasized the company's growing focus on expansion, shifting away from a primary focus on profitability improvement. The IT sector is intensifying competition for major outsourcing and technology transformation contracts as clients pursue enhanced productivity through artificial intelligence.

Concerns have emerged regarding AI's potential to disrupt traditional labor-intensive roles. Tech Mahindra noted that AI-related opportunities are driving growth in modernization, data, and new applications. The company intends to start reporting AI-related revenue in distinct categories in the second half of the fiscal year. Tech Mahindra believes that higher productivity driven by AI will expand the market for technology services.