Tech Mahindra Needs More Large Deal Wins For Turnaround

Bengaluru: Tech Mahindra’s strategy of turnaround is in the right direction but winning of large deals will provide comfort to the market about its sustainability in coming quarters, analysts and market experts said.

Currently, the mid-tier IT services firm has embarked on a journey to improve its revenue and operating margin performances. Under the current CEO, Mohit Joshi, the company presented a blueprint for turning around the company. Titled ‘Vision 2027’, the plan has three distinct phases. In FY25, Tech Mahindra will be in the ‘Turnaround phase’; in FY26, it will be in the ‘Stabilisation phase’, & in FY27, it will be ‘Reaping Returns’.

Similarly, under ‘Project Fortius’, the management plans to work on multiple levers for driv-ing its operating margin over the next three years.

In the first two quarters of FY25, the company has shown improved performance in both rev-enue and operating margin fronts. However, analysts said that for achieving a real turn around, the company needs to win more large deals.

“It’s early days (to say that turnaround has started). The strategy is in right direction. But they are not operating in vacuum and there is steep competition in the market place with many suc-cessful players. The test of real turnaround will come when Tech Mahindra starts winning large deals, which will accelerate its revenue growth. So, direction-wise, Tech Mahindra is on the right path but the market needs more evidence of real turnaround with large deal wins,” Pareekh Jain, Founder of Pareekh Consulting told the Bizz Buzz.

“Tech Mahindra is facing some obstacles in the path to its turn around. The challenge is to grow both its revenue and margin at the same time when the large deals are fundamentally margin dilutive. So, it has to be seen how the company manages these situations,” he added.

The company’s management has said during post earnings analyst call that the IT firm has been able to achieve the outcomes as part of its 3-year turnaround plan. With demand situa-tion improving globally, it may be at a better position to achieve the other milestones.

“We are living up to the strategy that we had laid out for all of our investors in April. We are on the path to a sustainable long-term transformation...We are well set to meet the expecta-tions that we have set earlier in April,” Mohit Joshi, CEO of Tech Mahindra has said during the Q2 analyst call.

“As we look at the second half, looking at foundational inputs that we have given both in margins, we are fairly confident that we will continue the trajectory we have had in the first half as well,” Rohit Anand, CFO of Tech Mahindra has said.