Mumbai, Oct 17, 2026: Tech Mahindra Limited reported a strong performance for the second quarter of FY27, delivering better-than-expected revenue growth, continued margin expansion, robust year-on-year profitability growth and healthy deal wins. The company sustained its operational improvement trajectory, with EBIT margins expanding for the twelfth consecutive quarter. However, free cash flow generation remained relatively subdued compared with the preceding quarter, warranting attention despite the strength in its operating performance.

Strong Revenue Growth and Profitability

Tech Mahindra reported consolidated revenue of ₹16,180 crore for Q2FY27, registering a 15.6% year-on-year (YoY) increase and a 3.0% quarter-on-quarter (QoQ) improvement. In constant currency terms, revenue grew 7.2% YoY and 2.4% QoQ, reflecting sustained business momentum and the contribution of large deal ramp-ups.

Earnings before interest and tax (EBIT) increased 40.5% YoY to ₹2,387 crore, while the EBIT margin expanded by approximately 40 basis points QoQ to 14.8%, marking the twelfth consecutive quarter of margin improvement. The margin was also approximately 260 basis points higher than the corresponding period last year, highlighting the benefits of operational discipline and ongoing business transformation initiatives.

Consolidated profit after tax (PAT) rose 32.7% YoY to ₹1,586 crore, compared with ₹1,195 crore in Q2FY26. Diluted earnings per share stood at ₹17.84 for the quarter.

Deal Wins Sustain Business Momentum

Tech Mahindra continued to demonstrate strong deal momentum, with total contract value (TCV) of new deal wins reaching US$1.023 billion, up 25.4% YoY. The company has now secured more than US$1 billion in deal wins in each of the last four quarters, reflecting sustained customer engagement and demand for its technology and transformation capabilities.

Key engagements during the quarter included partnerships across insurance, logistics, telecommunications, enterprise software, financial services, energy and industrial solutions. These engagements cover areas such as application management, AI adoption, infrastructure transformation, workplace modernization, wealth management platforms and customer experience enhancement.

The consistency of large deal wins provides a foundation for future revenue growth, although the pace at which these contracts translate into revenue and cash flows will remain an important factor to monitor.

AI-Led Transformation and Strategic Investments

The company continued to strengthen its artificial intelligence (AI) capabilities through new platforms, partnerships and enterprise-focused initiatives. Its business developments included the launch of Zero Gravity Telco Architecture™, designed to support telecommunications operators in their transition towards AI-native operations, and the Consumer Agentic Experience Studio, which enables enterprises to explore AI-led transformation across the consumer value chain.

Tech Mahindra also expanded its collaboration with technology partners across agentic AI, enterprise software, cloud, cybersecurity, quantum computing and physical AI. These initiatives are aimed at strengthening its service portfolio, improving delivery productivity and positioning the company to capture emerging enterprise technology opportunities.

While AI-led services offer potential avenues for future growth, the financial benefits will depend on successful commercial adoption, scalable delivery models and the company's ability to convert investments into sustainable revenue and profitability.

Cash Generation Remains a Key Monitorable

Despite the strong improvement in reported earnings, free cash flow stood at US$135 million in Q2FY27, compared with US$167 million in Q1FY27. The sequential moderation in cash generation suggests that cash conversion did not keep pace with the overall strength in operating performance.

Days sales outstanding stood at 88 days at the end of the quarter, making working-capital efficiency an important area to watch. The company reported cash and cash equivalents of ₹7,330 crore at the quarter-end, providing a liquidity cushion.

Going forward, the sustainability of earnings growth will need to be assessed alongside free cash flow conversion, receivables management and the timing of cash collections. Strong profitability remains encouraging, but consistent cash generation is equally important for funding investments and supporting shareholder returns.

Dividend and Shareholder Returns

The Board declared an interim dividend of ₹15 per share, reaffirming its commitment to shareholder returns. The payout comes alongside continued improvements in operating profitability and reflects the company's focus on delivering value to shareholders while investing in future growth opportunities.

Outlook

Tech Mahindra's Q2FY27 performance reflects continued progress across revenue growth, margins, profitability and deal wins. The company's 7.2% YoY constant currency revenue growth, 40.5% increase in EBIT and twelfth consecutive quarter of margin expansion underline the improvement in its operating performance.

The company has maintained its FY27 EBIT margin target of 15%, indicating continued focus on operational efficiency and profitability improvement. Sustained deal momentum and investments in AI-led services could support growth in the coming quarters.

Nevertheless, investors will need to monitor the pace of margin improvement towards the target, revenue conversion from large deals and the recovery in free cash flow generation. Overall, the quarter represents a strong operating performance, with cash conversion remaining the principal area requiring closer attention.

Source: Tech Mahindra Limited's Q2FY27 financial results and company disclosures dated October 15, 2026.