Tech Mahindra’s Q2 deal wins plunge 5.7% YoY to $603 million

Mohit Joshi, CEO, Tech Mahindra

IT services major Tech Mahindra’s net new deal wins for the second quarter ended September 30 stood at $603 million, driven by addition of new logos and partnership expansions in the banking, financial services and insurance (BFSI) vertical.

The company saw weakness in the communications and manufacturing vertical in Q2. Deal wins plunged by 5.7 percent YoY from $640 million reported in Q2FY24, while it grew by over 12.9 percent sequentially.

By region, business in Europe achieved 4.1 percent YoY growth and rest of the world achieved 9.7 percent YoY growth. The Americas was soft, with a 2 percent YoY decline Weakness in communications vertical is seen, as it declined 1.7 percent YoY.

Speaking at the company’s earnings conference, Mohit Joshi, CEO and MD, Tech Mahindra said, “As our key telecom clients continue to prioritise cost savings, their spending on discretionary projects is constrained. Manufacturing vertical had a soft quarter with a moderate 0.6 percent growth YoY as the outlook of discretionary spending in this vertical continues to be conservative.”

“BFSI vertical reported 4.5 percent YoY growth. In this vertical, we have strengthened partnerships with existing clients and signed up new logos. We are focused on utilisation of existing capabilities including those of portfolio companies. This is helping build a foundation of long-term growth in the sub-segments of insurance, asset management and payments,” he added.

Tech Mahindra is currently undergoing business restructuring under its new leadership. Beyond its core verticals like telecom and communications, Joshi’s mandate has been to help the company diversify and expand into other verticals including BFSI and healthcare.

Joshi highlighted that there were client specific pressures in the US in Q2. The company is expecting more clarity on telecom business after the US elections. Joshi is confident of Tech Mahindra emerging as a credible challenger in the BFSI space, where he said that the company has unique capabilities in Insurance, asset management, payments.

“We are still in the early stages of turnaround for business. We will see some volatility in the short term in BFSI and Telecom,” he added.

Tech Mahindra reported its Q2 earnings on October 19. The company posted a net profit of Rs 1,250 crore, up by 153.1 percent on a year-on-year (YoY) basis, beating Street estimates for the second quarter ended September 30, 2024.

Sequentially, net profit grew by 46.8 percent. Consolidated revenue for the quarter stood at Rs 13,313 crore, growing by 3.5 percent YoY and 2.4 percent QoQ, beating Street estimates.

EBIT margin for the quarter stood at 9.6 percent, a 110 bps improvement from 8.5 percent last quarter.