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View & Valuation:

TECHM is pivoting its growth through various vectors with focus on growing large client accounts, playing on Data, AI, Cloud and Engineering services-led themes and Fixed-Price projects to yield better productivity gains. Even the large deal wins and quality of pipeline is seeing uplift as the company recently expanded its relationships with a number of large clients and added a strong list of new clients. However, given the current weak macros, we believe TECHMs strategic turnaround journey, which began a year & a half ago, will take sometime to exhibit promising yet sustainable growth in the near term. We have revised our estimates downwards and expect Revenue/EBIT/PAT to expand at a CAGR of 7.3%/24.5%/21.7%, respectively, over FY25–FY28E. We have also revised our PE multiple to 22.0x (earlier 24.0x) to arrive at a revised target price of INR 1,730 from INR 1,931 and maintained our BUY rating

Q2FY26 Results: Revenue and EBIT in Line; PAT misses Estimates

* Reported Revenue for Q2FY26 stood at USD 1,586Mn up 1.4% QoQ (vs CIE est. at USD 1,591Mn). The CC growth was 1.6% QoQ & down by 0.3% YoY. In INR terms, revenue stood at INR 139.9Bn, up 4.8% QoQ and 5.1% YoY.

* EBIT for Q2FY26 came in at INR 16.9Bn, up 15.0% QoQ (vs CIE est. at INR 16.9Bn). EBIT margin was up 108bps QoQ to 12.1% (vs CIE est. at 12.2%).

* PAT came in at INR 11.9Bn, up 4.7% QoQ (vs CIE est. at INR 12.5Bn).

New Deal Wins Remain Strong; Focus on Converting Large Deals

TECHM reported Q2FY26 revenue of USD 1,586 Mn, up 1.6% QoQ in CC terms. TCV stood at USD 816Mn, rising 0.9% QoQ, surpassing the company’s target range of USD 600–800Mn, with deal ins well-distributed across Communications, BFSI, Manufacturing and Retail verticals. Management remains confident of sustaining deal momentum, emphasising on its efforts to convert large deals and expand the number of clients in the USD 20Mn+ category. Among verticals, Communications declined 2.0% QoQ, but is expected to stabilize. While Manufacturing grew 5.3%, BFSI and Retail rose 3.8% and 9.0%, respectively. TECHM is revisiting its three-year strategy amid slower-thanexpected progress, but remains optimistic of a strong FY27 performance.

Consistent improvement in Margins driven by Operational Efficiency

TechM reported its 8 th consecutive quarter of margin expansion, with EBIT margin improving to 12.1% in Q2FY26 from 11.1% in Q1FY26. The uptick was driven by higher fixed-price project productivity, volume growth, SG&A optimization, and a 40 bps currency tailwind. Management remains confident of achieving its FY27 EBIT margin target at 15%, supported by an increasing share of fixedprice projects, continued SG&A efficiencies, and a favorable offshore mix. However, we anticipate a conservative margin expansion to 13.6% by FY27. Employee headcount stood at 152,714 as of Q2FY26, while voluntary LTM attrition rose slightly to 12.8% (vs 12.6% in Q1FY26). About 1% of the global workforce is under H-1B, and US visa dependence remains below 30%.

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