Tech Mahindra’s CEO Mohit Joshi expects 2025 to outperform 2024, despite a challenging third-quarter performance, with subdued demand in its core telecom segment contributing to an earnings miss. The Indian IT sector, valued at $245 billion, has faced challenges with clients reducing discretionary spending amidst economic uncertainties and rising borrowing costs.
Joshi highlighted that much of the sector’s revenue depends on the macroeconomic landscape and overall enterprise expenditures, which have remained relatively unchanged in the past six months. “If we look at it from a calendar-year perspective, 2023 was probably the worst, 2024 showed improvement over 2023, and we believe that 2025 will improve over 2024,” Joshi told analysts.
In the October-December period, Tech Mahindra saw its revenue rise 1.4% to 132.86 billion rupees ($1.53 billion), while its net profit surged by 93% to 9.83 billion rupees. Despite the positive profit growth, both figures missed analysts’ expectations. The company’s order bookings for the period increased year-on-year and sequentially to $745 million, a trend Joshi described as sustainable and not temporary.
Joshi mentioned that the overall demand in the services industry has stabilized, with certain areas showing potential for improved spending. “The demand in services has shown stabilization, with some areas showing possibilities for improved spending,” he said.
Sagar Shetty, research analyst at StoxBox, noted that improved deal ramp-ups during the quarter helped offset seasonal furloughs. He added that with the momentum in deal wins and margin-accretive measures, Tech Mahindra is well-positioned to meet its turnaround targets.
While the company’s telecom segment, which accounts for one-third of its revenue, saw a decline of 5.6%, revenue from its banking, financial services, and insurance (BFSI) segment grew 8.3%. Joshi noted that growth in BFSI and other segments such as media and life sciences is “healthy” and that he sees “pockets of demand” in markets like North America, Europe, and Asia Pacific-Japan.
($1 = 86.5770 Indian rupees)
