Tech Mahindra delivered exceptional Q2 FY27 results, with consolidated net profit attributable to owners surging 32.74% year-on-year to ₹1,585.6 crore compared to ₹1,194.5 crore in Q2FY26, demonstrating strong operational momentum. Revenue from operations rose 15.6% YoY to ₹16,180.2 crore from ₹13,994.9 crore in the corresponding quarter last year, with constant currency revenue growing 7.2% annually and 2.4% sequentially. Dollar revenue increased 6.7% to $1,693 million versus $1,586 million in the year-ago quarter, showing robust international performance. EBITDA expanded 32.8% to ₹2,878.5 crore from ₹2,168 crore in the year-ago quarter, significantly outperforming expectations. The company's EBIT margin improved by 30 basis points QoQ to 14.7% compared to 14.4% in the sequential quarter, moving closer to the company's target of 15% by the end of FY27. The improvement was supported by strong volume growth, cost savings and rupee depreciation, as per The Times of India.
Following the better-than-expected Q2 results, brokerages offered mixed but largely positive views on Tech Mahindra. Nuvama raised its target price to ₹1,950 from the previous level, reiterating a 'buy' rating, citing that the company's strong deal wins and revenue growth position it to deliver the highest growth among top six Indian IT companies in FY27. Jefferies upgraded the stock to 'hold' from 'underweight' and raised its target price to ₹1,540 from ₹1,260, noting that the company's growth outlook was improving and its turnaround was becoming more visible. Motilal Oswal reiterated its 'buy' rating with a revised target price of ₹1,950, implying 18% upside, citing that the turnaround under new leadership continued to progress well and the company was within reach of its FY27 EBIT margin goal of 15%. Kotak Securities maintained its 'buy' rating and raised its target price to ₹1,870, while Choice Institutional Equities maintained its 'add' rating with a target price of ₹1,775, valuing the stock at 18 times average FY28/29 EPS. However, Citi remained cautious despite noting the results were slightly better than anticipated, maintaining its 'sell' rating with a target price of ₹1,355, emphasizing that the company trades at a 10-35% premium to peers and needs sustained performance.
Tech Mahindra's board declared a historic 1:1 bonus issue, under which shareholders will receive one bonus equity share for every existing equity share held, subject to shareholder approval through a postal ballot. The company announced this bonus issue to mark the company's 40th anniversary, with the bonus shares expected to be credited by December 15, 2026, subject to necessary approvals, with the record date to be announced separately. The bonus issue will involve allotment of approximately 98.02 crore new shares with face value of ₹5 each, amounting to about ₹490 crore. The company also approved an interim dividend of ₹15 per equity share of face value ₹5 each, equivalent to 300% for FY27, with the record date fixed as October 23, 2026, and payment scheduled by November 13 through electronic mode. This will be the first instance of Tech Mahindra issuing bonus shares to its shareholders since March 2015, when it had issued one bonus share in the 1:1 ratio. The company has consistently rewarded shareholders through dividend payouts, with over the past three years, Tech Mahindra has distributed a total of ₹168 per share in dividends, including interim payouts of ₹15 per share in October 2024 and October 2025. The board also recommended increasing the company's authorised share capital to ₹1,000 crore from ₹924.3 crore to facilitate the proposed bonus issue.
Tech Mahindra shares surged 8% to the day's high of ₹1,979 on Friday, emerging as the top gainer on the Nifty 50 and topping the Nifty IT index as well. The stock was trading 7.87% higher at ₹1,779.90 on the NSE, gaining ₹129.90, with the market capitalisation increasing by ₹10,974.86 crore to ₹1,72,895.16 crore. The rally in technology stocks helped domestic equity benchmarks turn positive after a muted start on Friday, with the IT index rising 3% as Tech Mahindra led the advance after beating second-quarter revenue expectations on the back of robust deal wins. The positive sentiment extended to other major technology stocks, with Infosys trading nearly 4% higher, TCS gaining 3.26% and HCLTech rising more than 1%. Wipro shares advanced 5.7% after the company reported September-quarter revenue above expectations, while Reliance shares fell 0.3% after gaining 3.4% in the previous session. Brent crude was hovering around $105 per barrel on Friday, with 11 of 16 major sectors trading higher despite concerns about elevated crude oil prices and rising US producer prices.
Tech Mahindra's new deal wins TCV came in at $1.023 billion Q2 FY27, up 25.4% YoY, with deal bookings exceeding $1 billion for the fourth consecutive quarter. The company reported total contract value of $1.02 billion, compared with $1.07 billion in the previous quarter. Management noted that H-1B visa holders accounted for less than 1% of its workforce, and the company does not expect seasonality to affect the December quarter performance. CLSA highlighted that Tech Mahindra's order book continued to grow strongly, rising 25% year-on-year despite the absence of mega deal wins during the quarter, with management expressing confidence in sustaining momentum. Systematix analysts highlighted that Project Helix, the SpaceXAI partnership, and TechM's AI assets strengthen its AI-led services proposition, though the company indicated it would disclose its AI-led revenue in the second half of the fiscal. Management indicated that pricing compression in IT services was driven more by intense competition than by pressure on IT services budgets due to AI, with the focus shifting towards growth without sacrificing margins. CEO and Managing Director Mohit Joshi emphasized that "Deal wins exceeding $1 billion in each of the last four quarters reflect the strength of our customer relationships and the trust we have built," while CFO Rohit Anand noted the company had delivered margin expansion for the twelfth consecutive quarter.
