Tech Mahindra will focus on protecting its margins over chasing large deals, Mohit Joshi , CEO and MD of the IT major said during the company's post-earnings conference call on October 19.
".....we will prioritize margins over large deals at this point in time," he said. "We want to be very clear that in this environment, it is very tempting to do the sort of deals that can potentially come back to bite you later by making heroic assumptions about productivity or making heroic assumptions about what can be accomplished. And we are shying away from that," he said.
The Pune-based company's focus on boosting margins is reflected in its Q2Y25 performance, with margins rising by 110 basis points quarter-on-quarter to 9.6 percent. This marked the third consecutive quarter of margin improvement Tech Mahindra, thanks to Project Fortius, which includes measures to cut costs and enhance operational efficiency. Nonetheless, the company's margin lags behind peers who posted margins anywhere between 16-24 percent.
Also Read | Tech Mahindra’s Q2 deal wins plunge 5.7% YoY to $603 million
Joshi said that Tech Mahindra is working on both short-term and long-term measures from a margin perspective. "In the short term, you can see a reduction in sub-contractor costs as a percentage of revenues and at the same time, we are also adding more freshers to the company and investing in the long term," he said.
The company also reported net new deal wins worth $603 million in the Q2 FY25, primarily driven by additions in the banking, financial services, and insurance (BFSI) vertical. Although deal wins were down 5.7 percent year-on-year, they increased by 12.9 percent sequentially.
Tech Mahindra said that it will continue to broaden its pipeline while improving conversion rates. "....there is a
huge will to win and to make sure that we are getting our fair share of large deals. I also feel that we are creating the institutional capabilities that will help us broaden the pipe and improve our conversion rates going ahead," Joshi said.
Tech Mahindra reported a strong performance for the quarter ended September, with consolidated net profit surging nearly 47 percent quarter-on-quarter to Rs 1,250 crore, surpassing Moneycontrol's estimate of Rs 1,036 crore. Revenue from operations grew by 2.4 percent QoQ to Rs 13,313 crore, also beating Moneycontrol's forecast of Rs 13,171 crore.
On October 18, shares of Tech Mahindra closed 0.8 percent lower at Rs 1,685.2 on the National Stock Exchange.
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