Tech Mahindra’s EBIT margin is expected to increase 50-70 bps in the March ending quarter, led by cost optimisation and currency tailwinds, as per brokerages.
Motilal Oswal Financial Services estimated EBIT margin to expand around 50bps sequentially to around 13.6 per cent, while Choice Institutional Equities estimates 70 bps increase led by Project Fortius cost efficiency program.
“Management remains confident of achieving its FY27 EBIT margin target of 15 per cent, supported mainly by gross margin expansion,” said Choice in its research note.
Kotak Instittutional Equities estimated 60 bps EBIT expansion led by operating efficiencies and rupee depreciation. However, it expects muted net profit growth due to $25 million forex loss. Meanwhile, Nuvama Research estimated a lower margin growth of 30bps but still nodded in favour of the 15 per cent margin guidance.
In terms of revenue, the company is expected to report flattish growth. Axis Securities estimated a 3.5 per cent sequential revenue growth led by higher contribution from BFSI and Manufacturing verticals. Telecom and communication are expected to grow as well while hi-tech and auto remain volatile.
Brokerages unanimously expect a strong deal pipeline with a focus on avoiding large deals that dilute margins. Analysts noted that management remains focused on converting large deals and expanding the high-value client base, which will support medium-term growth visibility. Margin improvement is also likely to remain on track under Project Fortius, although much of the near-term profitability recovery appears priced in at current valuations, said Choice Institutional Equities.
“We forecast net new deal wins of $1.1 billion, flat sequentially and up 38 per cent annually. Orange deal signed is substantial. Deal momentum in other verticals is also strong,” said Kotak Institutional Equities.
Firms suggested investor focus on company outlook for FY27 like margin expectations, reinvestment to accelerate revenue growth as well as details on the agentic AI approach of Tech Mahindra. Profitability of recently won large deals, hedging strategy (Tech Mahindra reduced forward cover over past ]quarters), demand outlook in the Communication and Hitech verticals, AI-led deflation, client mix, were other points of focus for brokerages.
Tech Mahindra will be announcing its fourth quarter and FY26 annual results on Wednesday.