Tech Mahindra has been lagging peers. But it’s sticking to its turnaround timeline

India’s fifth-largest software services provider expects revenue growth to accelerate as macroeconomic conditions improve by March 2027, chief executive officer (CEO) Mohit Joshi told analysts during the Mahindra Group investor conference in Mumbai on 20 November.

However, the company must report revenue growth after two successive years of revenue decline. That comes when uncertainty around client spending and vendor consolidation, where companies are narrowing the number of IT vendors they work with, said analysts interviewed by Mint said, citing conversations with the Tech Mahindra management.

In April last year, four months after Joshi took over as CEO, Tech Mahindra outlined a three-year roadmap to improve its operating margins to 15% by March 2027, grow faster than peers during this period, and reduce its dependence on telecom companies that made up 40% of its business.

The country’s fifth-largest IT services firm reported a compounded quarterly growth rate (CAGR) of 0.41% between 1 April 2024 and 30 September 2025, higher than Tata Consultancy Services Ltd’s 0.23% and Wipro Ltd’s revenue decline of 0.34%. On the other hand, Infosys Ltd and HCL Technologies Ltd grew 1.8% and 1%, respectively.

India’s mid-cap IT services companies, which earn between $1 billion and $5 billion in annual revenue, reported a compounded quarterly growth between 1.3% and 8.3% during the period.

Under Joshi, Tech Mahindra’s operating margins have grown the fastest among the big five, by about 470 basis points to 12.1%. In contrast, TCS’s and HCLTech’s profitability fell 80 basis points and 10 basis points to 25.2% and 17.5%, respectively. Infosys and Wipro’s margins expanded 90 basis points and 30 basis points, respectively.

Much of this margin expansion stemmed from lower subcontracting costs, eliminating low-margin accounts and higher margins from fixed-price projects.

While Tech Mahindra banks on large deal wins to boost growth, it refrained from commenting on large deal wins.

“Our stated goal for FY2027 has been to grow ahead of the peers’ average. Over the past 18 months, we have consistently narrowed the gap with our peers, reflecting the progress we are making," said Tech Mahindra in response to Mint’s email, adding that it does not comment on external estimates or provide a forward-looking guidance.

Growth optimism

At least two brokerages said that Tech Mahindra’s full-year revenue targets imply a growth of 4-8% by the end of FY27. For this, the Pune-based IT services company will need to grow at nearly four times its expected pace in FY26.

“It (Tech Mahindra) expects modest industry growth pick up in FY27, likely increasing by a couple of percentage points from the 0-2% range expected in FY26," said Bank of Baroda Capital Markets analysts Girish Pai and Lopa Notaria, in a note dated 21 November.

This implies a 4% yearly growth rate by the end of FY27, which the brokerage attributed to be broad-based across sectors.

Tech Mahindra is aspiring for about 1.3x revenue growth over FY20-27, which implies a around 4.8% dollar revenue CAGR over FY25-27 and about 7-8% growth for FY27E versus the much lower estimates of about 2% for FY26, HDFC Securities analysts Amit Chandra, Vinesh Vala, and Maitreyee Vaishampayan said in a note dated 21 November.

The company aspires to reach the industry growth rate by FY27, “supported by investment in key markets, high-growth service lines (like consulting, data & AI, and engineering services), and account mining (>USD 20 mn accounts)."

If the company’s revenue grows 2% at best in FY26, it would end the fiscal with a revenue of $6.34 billion. To grow at 8% next fiscal, it would need to add more than $500 million incrementally after two consecutive years of revenue decline.

Tech Mahindra, which ended the April-September 2025 period with $3.15 billion in revenue, up 0.06% from the year-ago period. It needs $3.11 billion in the ongoing six months to match last fiscal’s revenue of $6.26 billion. That appears within reach as it would have to lose revenue to miss its quarterly target of $1.56 billion.

Banking on Mahindra group

Business predictability was one of the key aspects of this three-year plan.

“So, this is our vision for FY27. A top-line growth that is greater than peer average, industry standard margins and most importantly, a high degree of predictability in our revenue and profitability that has candidly been missing in the past," said Joshi, during the post-earnings analyst call in April 2024.

Despite the market uncertainty, the company expects macroeconomic conditions to improve. It is also prioritising tapping more business from banks, retailers, and logistics companies, and the anticipated India-US trade deal, which it believes could unlock non-essential IT spending, according to analysts–who were among 200 people to attend the Mahindra Group’s conference at Mumbai’s Jio Convention Centre.

The company is also placing its bets on group companies, including the car brand.

“Going by what we saw at the showcases during the event, TML benefits from the work that it does with its auto parent on the engineering services and manufacturing side, which it can take to its clients," said the Bank of Baroda analysts.

Uncertainty persists

Still, the management’s optimism does not come without concerns

Joshi indicated “very competitive bidding" on some large deals with annual productivity pass-back, said Bank of Baroda analysts. “While TML has been able to break through some key BFSI accounts, the deal flow has not been up to his own expectation," they said, adding that in the current vendor consolidation environment, Joshi highlighted that “it becomes harder for a new vendor".

Tech Mahindra, which has traditionally considered its telecom service offerings as its special moat, is now doubling down on banking, retail, logistics, and healthcare to narrow the growth gap with peers, according to the Mahindra Group’s 182-page investor presentation.

Tech Mahindra gets about a third of its revenue from banks, retailers, healthcare and logistics companies.

Even as its revenue outlook was modest, the company was upbeat on operating margins. It also reiterated its previous stance on improving profitability to 15% by the end of FY27.

“TechM is firmly on the margin expansion path, as evidenced through six consecutive quarter improvement in Ebit (earnings before interest and taxes) margins (from 8.5% in Q1FY25 to 12.1% in Q2FY26)," said the HDFC Securities analysts. “This was driven by initiatives like Project Fortius for cost savings, productivity gains, and a focus on high-margin service lines."