Tech Mahindra Beats Sector Gloom with Q2 Growth

Tech Mahindra announced its June 2026 quarter results, revealing a 2.6% increase in constant currency revenues, reaching Rs 15,711.9 crore. This growth signifies a potential upturn for the IT services sector, which has seen the NSE IT Index decline by approximately 25% this calendar year. The company's performance was bolstered by strong contributions from verticals like manufacturing and BFSI.

Improved revenue growth and a reduction of 863 employees contributed to Tech Mahindra's operating profit margin increasing by nearly 50 basis points to 17.5%. Employee costs as a percentage of revenue decreased, aiding a net profit growth of 9.6% quarter-on-quarter to Rs 1,486.3 crore. HCL Tech also saw margin improvement and workforce reduction, with net profit rising 3% quarter-on-quarter.

HCL Tech reported $171 million in Advanced AI revenues for the June 2026 quarter, a 10.6% growth. Tech Mahindra, while not disclosing specific AI revenue, highlighted several ongoing global AI projects. Both companies reduced their workforce to manage costs and defend margins.

In terms of new deal wins, Tech Mahindra secured $1.07 billion, while HCL Tech reported a stronger $2.4 billion. HCL Tech maintained its FY27 Services revenue growth forecast at 1.5% to 4.5% on a constant currency basis, a projection that has impacted investor sentiment negatively.