The results season is on once again in the Indian stock markets where companies are presenting their results for the third quarter of FY25. One of the key sectors that investors are looking out for is technology. With TCS and Infosys posting better than expected numbers. Another tech giant, Tech Mahindra has presented its third quarter results. With net profits up 88.5% year-on-year, is it really worth the hype? Read this blog to understand Tech Mahindra’s Q3 performance in detail.
Tech Mahindra Q3 results
Tech Mahindra is an IT services company that provides IT and consulting services that includes cloud and engineering services, business consulting, application development, etc. It is one of the largest IT companies in India and it has declared its Q3 results on 17 January 2024.
The company has reported a mixed set of results where revenue stood at ₹13,286 crores which is down by 0.2% QoQ; yet shows a 1.4% growth YoY.
Company’s net profits stood at ₹983.2 crores which is a slump of 21% QoQ but YoY profit growth was 92.63%. Tech Mahindra laid off 3,785 employees in the third quarter and the total employee count stood at 150,448. The fall in revenue can be attributed to subdued client spending and currency volatility.
Tech Mahindra won contracts worth $745 million in Q3 FY25. Management has stated that the large deal wins and increased profitability is due to Project Fortius, which is the company’s plan to reduce costs and increase operational efficiency. The company also launched TechM agentX which is a generative AI tool for enhancing efficiency and driving intelligent automation.
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Tech Mahindra Ltd financial performance
In the second quarter of FY25, Tech Mahindra reported stellar results as a result of growth in the American and European market and strong performance in the Banking, Financial Services and Insurance (BFSI) segment.
| Particulars | Q3 FY2025 | Q2 FY2025 | Q1 FY2025 | FY24 |
| Revenue (₹ crores) | 13,286 | 13,313 | 13,006 | 51,996 |
| Expenses | 11,477 | 11,563 | 11,441 | 47,489 |
| Net Profit (₹ crores) | 989 | 1,258 | 865 | 2,397 |
| Net Profit Margin | 7.39% | 9.44% | 6.65% | 4.6% |
| EPS | 10.05 | 12.78 | 8.71 | 26.66 |
Source: Screener
The company saw a plunge in QoQ revenue due to a 4% QoQ drop in revenues from the communications industry and 3.7% drop in revenues from the manufacturing industry and 1.5 % QoQ drop from technology, media and entertainment sector. Tech Mahindra has collaborated with Amazon and Nvidia and various other companies for business development.
Tech Mahindra’s earnings per share has fallen QoQ from ₹12.87 in Q2FY25 to ₹10.05 in Q3FY25. But it has almost doubled from ₹5.23 in the same quarter previous year.
The company saw a fall in QoQ net profits and revenues but despite that the company’s CEO and MD Mohit Joshi has said that the company is on the right track to achieve its long term goals. Among new deal wins the company won contracts from German and Canadian telecom companies, a European chemical company and an auto maker.
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Share Price Movement
Midex Q3 results led to skepticism amongst market players. The results were declared on January 17, 2025 after the markets closed. The company’s share price fell 1.78% from ₹1687.65 and closed at ₹1,657.65.
Source: NSE
In the last 6 months Tech Mahindra’s share price has risen 7.69% but in the past month the stock has seen significant selling and went down 6.39% as a result of downward pressure in the entire technology sector.
This slowdown is due to the slowing economy and high interest rate environment. Brokerages have mixed views about the stock with some giving buy ratings whereas others giving sell ratings.
SWOT analysis: Tech Mahindra Limited
| Strengths | Weakness | Opportunities | Threats |
| The company earns its revenues from different geographies like US, Europe and India | The company reported decline in QoQ revenues and Net profits. | Increasing demand for cloud based computing solutions can benefit the company. | High competition from major players such as TCS, Infosis, Wipro can impact new deal wins. |
| Revenues come in from clients in different industries like BFSI, Telecom, IT, etc. | The company has a ROE of 8.63%, that is quite low as compared to other players in Technology sector | Demand for data center and data management services is increasing significantly. | Currency fluctuations can impact the company’s revenues and profitability. |
| The company has strategic partnerships with global giants like Google, Microsoft, etc. | The company has a very high Price to book value of 6.14. | Increased adoption of AI in all sectors can help the company grow its software services business. | Heavy investment requirements due to changing technology can impact profitability. |
Also read: The world of currency fluctuations: How does it impact your investments?
Bottomline
Tech Mahindra is a crucial player in the technology sector. Despite its slowed quarter on quarter performance, yet a positive year-on-year peformance keeps the management is optimistic about the future. Its Q3 performance is mixed with revenue down 0.2% and net profits down 21% on a QoQ basis, but new deal wins stood at a staggering $745 million. The brokerages have mixed sentiment after the Tech Mahindra results . Investors should carefully analyze the historic performance of this stock before investing.
