Tech Mahindra Net Profit Rises 33% as CEO Dismisses AI Deflation Concerns
Tech Mahindra Limited (NSE:TECHM) reported strong financial results for the second quarter of fiscal year 2027, driven by expanding demand for technology services and artificial intelligence integrations. Consolidated revenue reached Rs 16,180 crore, representing a 15.6 percent year-on-year increase and 7.2 percent growth in constant-currency terms. Net profit after tax jumped 32.7 percent to Rs 1,586 crore, while quarterly deal wins surged 25.4 percent to $1.023 billion.
The firm is shifting its focus toward broader growth following 12 consecutive quarters of margin expansion. Chief Executive Officer Mohit Joshi addressed market concerns regarding artificial intelligence lowering contract values, stating that AI deflation risks are overstated. Instead, the company sees expanding opportunities in software development, application modernization, and data infrastructure. Nearly all large deal wins now include an AI component, prompting new composite pricing models that blend human labor with automated token usage.
Looking ahead, investors should track how token-based pricing impacts long-term contract values and margins across the technology services sector. Key items to watch include potential targeted acquisitions to bolster capabilities and the ongoing rollout of AI tools across enterprise client environments. Additionally, management highlighted minimal regulatory risk from immigration, noting that H-1B visa holders make up roughly 1 percent of its workforce.
Key points
- Tech Mahindra reported Q2 FY27 consolidated revenue of Rs 16,180 crore, up 15.6% year-on-year, with profit after tax rising 32.7% to Rs 1,586 crore.
- New deal wins rose 25.4% year-on-year to $1.023 billion, while operating margin reached 14.8%.
- CEO Mohit Joshi stated that AI deflation concerns are overstated, noting almost 100% of large deal wins now feature an AI component.
- The company is implementing new pricing models combining human labor and token usage to capture value from automated processes.
- H-1B visa holders account for approximately 1% of the overall workforce, limiting direct exposure to changes in US immigration policy.
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What were Tech Mahindra's Q2 FY27 financial results?
Tech Mahindra reported revenue of Rs 16,180 crore for Q2 FY27, up 15.6% year-on-year, while profit after tax rose 32.7% to Rs 1,586 crore. Quarterly deal wins increased 25.4% year-on-year to $1.023 billion, and operating margin stood at 14.8%.
How is Tech Mahindra adapting its pricing for artificial intelligence?
The company is developing a composite pricing model that combines traditional human labor costs with token consumption metrics. This structure allows clients to understand delivery costs as automated AI agents and human supervision work together on software projects.
What is Tech Mahindra's exposure to US H-1B visa changes?
Tech Mahindra has limited direct exposure to US visa rules, as H-1B visa holders make up about 1% of its total workforce. In addition, around 70% of its regional employees in the country are permanent residents.