•The demand environment remains uncertain due to tariff and policy risks. Discretionary spending remains cautious.
•Telecom vertical has stabilized and is showing signs of growth; Manufacturing (especially auto) and Hi-tech remain weak due to tariff uncertainty and client-specific cutbacks.
•BFSI remains resilient driven by asset and wealth management, and payments; Retail gains momentum in digital transformation deals.
•Total Contract Value (TCV) for the quarter was USD 809mn, up 44% YoY. Revenue accretion from large deals is expected to start showing from 2Q onwards.
•TechM is focusing on driving growth by prioritizing expansion in key accounts, onboarding “must-have” clients (with 15 added in 1Q), and securing high-value, profitable large deals.
•Management expects FY26 to be better than FY25 in terms of growth, driven by telecom stabilization, BFSI/retail strength, large deals, and AI adoption.
•TechM reaffirmed its FY27 targets—higher growth than peers and 15% EBIT margin. Key margin levers include cost efficiencies from Project Fortius, favorable offshore mix, and G&A optimization.
•“AI Delivered Right” strategy gains traction, deploying 200+ AI agents across industries, enhancing client transformation, productivity.
•Only ~250 freshers onboarded in Q1; focus remains on upskilling the 6,000 hired last year. Hiring to resume more meaningfully once visibility improves.
Our View: We maintain SELL rating on the stock with a revised TP of Rs. 1,112 (Rs 1,182 earlier), based on 15x FY27 EPS. The stock is currently trading at 27x 1-year forward PE. TECHM is making steady progress on margins, but delivering growth better than peers shall be difficult with telecom vertical still comprising ~34% of revenue while incremental margin expansion shall be a challenge.
Thanks and Regards,
Ambrish & Devanshi
Systematix IE
