Tech Mahindra Q1 Results: Tariff Uncertainty Hits Americas Business

A continued lag in discretionary spending, combined with the impact of uncertainty around US tariffs, led to a 5.9% year-on-year decline in Tech Mahindra’s Americas business during the first quarter of the financial year 2025–26 (FY26). The region accounts for nearly half of the IT major’s total revenue.

In contrast, the European business recorded strong growth of 11.7% YoY, while revenue from the Rest of the World segment grew by 2.9% YoY. However, these gains could not offset the weakness in the Americas, and the company posted flat revenue growth for the June quarter.

Tech Mahindra reported net revenue of $1,564 million (USD), reflecting a modest 0.4% rise YoY. In constant currency (cc) terms, revenue declined by 1.4% QoQ and 1.0% YoY. In INR terms, revenue stood at ₹13,351 crore, down 0.2% QoQ but up 2.7% YoY.

"I feel that in certain sectors impacted by tariffs and weak demand—like automotive—the sentiment is still not conducive to significant discretionary investments. In some other sectors, like telecom, we have seen stabilisation and growth this quarter, which we expect will continue," said CEO Mohit Joshi, addressing reporters after the earnings announcement. He expects a recovery to begin in the second half of the year.

“BFSI has been more stable. We are seeing a lot of traction and activity in our European business, which is reflected in our numbers, along with growth in our APJ business. So it's a mixed picture—both across geographies and industries,” he added.

Across verticals in Q1, Healthcare and Lifesciences declined 5.2% YoY, Manufacturing fell 4.0% YoY, and the Technology, Media, and Entertainment (Hi-Tech) vertical was down 3.3% YoY. On the positive side, BFSI grew 4.7% YoY, Retail, Logistics and Transport rose 3.8% YoY, and Communications—which contributes 33.8% of revenue—was up 2.5% YoY.

“From a year-on-year perspective, the biggest drag has been from the manufacturing sector. Last year, telco also faced ramp-downs from some of our top clients, which is now normalising,” the CEO noted.

He also highlighted volatility in the Hi-Tech segment, stating: “In this sector, clients cut spending very quickly if they fear a recession. One of our largest clients was significantly impacted by internal restructuring.”

“It's a mixed picture, and I feel it's too early to say whether the tide has turned towards significant growth or a downturn,” Joshi added.

Despite these challenges, Tech Mahindra reported a 34% year-on-year jump in net profit for the April–June quarter, reaching ₹1,141 crore, up from ₹852 crore in the same period last year. Total expenditure remained flat at ₹11,952 crore, supporting margin expansion.

Strong Deal Pipeline Expected

Net new bookings rose to $809 million, up from $798 million in the previous quarter and $534 million a year ago. The company added two clients with deal values exceeding $50 million during the quarter.

CEO Mohit Joshi said the company’s performance reflects “disciplined execution and a focused strategy”, noting that deal wins have increased 44% on a last-twelve-month basis, with broad-based growth across geographies.

“Overall, our largest clients are growing faster than the company average, and we remain confident in our strategy of deepening those relationships. However, the macroeconomic environment remains so uncertain that quarterly variations across clients are to be expected,” he said.

CFO Rohit Anand highlighted that Tech Mahindra has delivered seven straight quarters of margin expansion, crediting the company’s Project Fortius (a turnaround plan announced in 2023) for driving operational gains. EBIT margin rose 260 basis points YoY to 11.1%, while PAT margin improved by 190 basis points to 8.5%.

Meanwhile, headcount dropped by 622 sequentially, and attrition ticked up to 12.6% from 11.8% in the previous quarter.

The company executive acknowledged that during the past quarter, they had built up a certain level of bench strength, which they expect to reduce based on increased demand.

“Hiring will really be dependent on how we see the overall demand picture play out for the rest of the year,” Anand said.