Tech Mahindra Ltd (TECHM) Q1 FY27 Results Analysis: EBIT Margin Expands 379 bps, Deal Wins Stay Above $1Bn

Tech Mahindra Ltd's Q1 FY27 numbers came in strong, with revenue of Rs. 15,711.90 Cr (+17.68% YoY) and PAT growth of +28.45% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

USD revenue growth of 6.1% YoY is a clear acceleration from FY26's 1.9%, with EBIT margins expanding 379 bps YoY despite the Q1 salary cost cycle. Deal wins of $1,078 Mn (third consecutive $1Bn+ quarter) and all six verticals growing indicate broad-based demand. The 15% EBIT margin target for FY27 is on track, needing only ~60 bps further improvement over three quarters.

Key Investment Insights

Key Positives

• Revenue grew 17.7% YoY to Rs.15,711.9 Cr; USD revenue grew 6.1% YoY accelerating from FY26 full-year growth of 1.9%
• EBIT margin expanded 379 bps YoY to 14.41%, the highest Q1 level in at least three years
• Total Contract Value $1,078 Mn, third consecutive $1Bn+ quarter and +33% YoY
• Free Cash Flow $167 Mn, highest Q1 in available series, at 108% conversion of PAT
• Days Sales Outstanding improved to 84 days from 95 a year ago, the best in the available data series
• All six major verticals grew YoY; Europe geography standout at +8.1% QoQ and +12.1% YoY

Risk Factors

• Communications vertical (32.3% of revenue) declined 1.3% QoQ, remaining in low-growth mode
• Other expenses grew 13.1% QoQ and 26.7% YoY, outpacing revenue growth
• Effective tax rate increased to 27.21% from 24.25% in Q4 FY26, driven by a deferred tax charge of Rs.130.0 Cr
• Subsidiary contribution fell sharply to Rs.327.2 Cr from Rs.812.5 Cr in Q4 FY26 (though Q4 was inflated by a Rs.575.0 Cr impairment reversal effect in standalone)