Tech Mahindra, a leading IT services provider, reported a significant 153.1% year-on-year increase in its consolidated net profit for the second quarter of FY25, reaching Rs 1,250 crore. This marks a sharp rise from the Rs 493.9 crore net profit posted during the same period in the previous year. The company’s revenue also grew, albeit more modestly, by 3.49%, reaching Rs 13,313.2 crore. CEO Mohit Joshi credited the company's strategic initiatives, notably Project Fortius, for improving margins, while CFO Rohit Anand highlighted strong cash flow and deal wins as key contributors to Tech Mahindra's performance.

1. Significant Surge in Net Profit

Tech Mahindra recorded a 153.1% year-on-year jump in consolidated net profit for Q2 FY25, reaching Rs 1,250 crore, compared to Rs 493.9 crore during the same quarter in FY24. This notable increase was driven by operational improvements and successful cost optimization measures.

2. Modest Revenue Growth

Revenue for the July-September quarter of FY25 stood at Rs 13,313.2 crore, representing a 3.49% growth over Rs 12,863.9 crore in Q2 FY24. While this growth was modest, it reflects the company’s ongoing efforts to strengthen client relationships and broaden its partner ecosystem, even in a challenging IT services landscape.

3. Sequential Growth in Profit and Revenue

When compared sequentially to Q1 FY25, Tech Mahindra achieved a 46.81% increase in net profit and a 2.36% rise in revenue, underscoring the company's ability to sustain growth momentum despite a softer IT services market.

4. Operational Excellence through Project Fortius

CEO Mohit Joshi, who took the helm in December 2023, credited Project Fortius—a three-year strategic plan aimed at achieving a 15% operating margin—for Tech Mahindra’s improved performance. Unveiled in April 2024, the project focuses on organic growth, cost optimization, and operational excellence, which contributed to a third consecutive quarter of margin expansion.

5. Strong Deal Wins and Free Cash Flow

Tech Mahindra saw consistent performance in terms of deal wins, revenue growth, and cost optimization during the quarter. CFO Rohit Anand emphasized that the company is generating steady free cash flow as it works toward its FY27 financial targets. As part of its capital allocation policy, the board declared an interim dividend of Rs 15 per share.

6. Expansion of Workforce

The Pune-headquartered firm expanded its workforce by adding 6,653 new employees during Q2 FY25, bringing the total staff count to 154,273 employees. This increase reflects Tech Mahindra's commitment to scaling its operations and meeting growing demand for its services.

7. Stock Performance

Despite strong financial results, Tech Mahindra’s stock dipped by 0.68%, settling at Rs 1,688 per share on the BSE on Friday. Market dynamics and investor sentiment may have influenced the stock movement, though the company's robust financial health positions it well for future growth.

Conclusion

Tech Mahindra’s Q2 FY25 results showcase a company that is capitalizing on strategic initiatives to bolster profit margins and revenue growth. Project Fortius is proving to be a key driver of operational improvements, while consistent deal wins and cash flow generation signal a bright outlook for the company. However, challenges remain, including the need to sustain revenue momentum in a soft IT services market. Investors and stakeholders will be watching closely as Tech Mahindra continues its trajectory toward its FY27 goals.