Tech Mahindra: Global IT Leader Strengthening Operations Through Strategic Mergers
Tech Mahindra Ltd: Overview
Tech Mahindra is a leading global technology company, part of the Mahindra Group, offering IT and business process outsourcing services. Founded in 1986, the company provides innovative solutions in digital transformation, consulting, and business re-engineering across industries such as telecommunications, healthcare, BFSI, and manufacturing. It has an employee base of more than 145,000 across 90 countries, and provides services to 1200+ clients. The global IT services industry, valued at over $1 trillion, is essential for helping businesses across sectors innovate, streamline operations, and improve customer experiences through advanced technologies like artificial intelligence (AI), cloud computing, app development & maintenance services the Internet of Things (IoT), and 5G. While industry growth was around 8.4%, it slowed to 5.4% in CY23 due to geopolitical pressures and various market shifts. The first quarter was challenging for the IT sector as many major clients reassessed their IT spending, focusing on larger, more efficient providers an advantage for Tech Mahindra. Despite the broader industry weakness, Tech Mahindra had a strong quarter, partnering with 7 of the top 10 companies, which helped maintain its market position and secure ongoing client orders.
Latest Stock News (20 Jan, 2025)
The Board of IT services and consultation company Tech Mahindra has approved the merger of its arm Healthnxt Inc. with parent company Tech Mahindra Americas. TMA, a wholly-owned material subsidiary of the company, provides computer consulting, programming support services and IT Management and Consulting Services to customers in various industries including healthcare. Healthnxt is wholly-owned subsidiary of TMA and a step down wholly-owned subsidiary of the company. It is a virtual healthcare company that offers fully integrated inpatient experience at home and outsourced services. The business of both entities Healthnxt and TMA are complimentary hence consolidation of the entities will result in synergy of business operations, optimize operational cost and reduce the compliance risk. The investment of TMA in Healthnxt will get cancelled on the merger becoming effective. Tech Mahindra, in a regulatory filing today, informed that NCLT, Mumbai, has sanctioned the Scheme of Merger by Absorption of Perigord Premedia (India) Private Limited, Perigord Data Solutions (India) Private Limited, Tech Mahindra Cerium Private Limited and Thirdware Solution Limited, wholly-owned subsidiaries of the Company with the Company. The merger will result in reduction in the overheads including administrative, managerial and other expenditure, and optimal utilization of resources by elimination, if unnecessary duplication of activities and related costs. It will provide better opportunities to scale up their performance with a larger corporate entity having large revenue base, resources, assets base etc.
Business Segments
- Tele communications: It provides end-to-end services for telecom companies, including 5G network implementation, software-defined networks (SDNs), and Network Function Virtualization (NFV). Tech Mahindra’s expertise in telecom is a major differentiator, allowing it to support clients in the telecommunications industry as they undergo digital transformation.
- Manufacturing: Tech Mahindra works with global manufacturing and automotive companies, offering IT and engineering services that span product lifecycle management (PLM), industrial IoT, smart manufacturing, etc.
- Cloud Infrastructure: Tech Mahindra helps companies migrate to cloud-based platforms, implement AI-driven analytics for decision-making, and improve digital security measures. This segment supports businesses in adopting cutting-edge technologies for greater agility and innovation.
- Healthcare & Life Science: Tech Mahindra provides IT solutions specific to the healthcare and life sciences sectors, such as healthcare management systems, digital healthcare platforms, and compliance management.
- BFSI: It offers innovative solutions for retail banking, lending and leasing, cards and payments, asset and wealth management, investment banks, and stock exchanges. We offer technology capabilities around consulting, enterprise architecture, business, network, security and BPS solutions, and modernisation initiatives like cloud, engineering, connectivity, customer experience and ESG.
Subsidiary Information
- Tech Mahindra USA Inc.: As a wholly-owned subsidiary of Tech Mahindra Limited, Tech Mahindra USA Inc. serves as a pivotal entity in the North American market. It offers a comprehensive range of IT services, including consulting, digital transformation, and business re-engineering solutions, catering to diverse industries such as telecommunications, healthcare, and manufacturing. Leveraging its deep domain expertise and technological capabilities, the company enables clients to navigate complex digital landscapes and achieve operational excellence.
- Zen3 Infosolutions Inc.: Specializing in artificial intelligence, data analytics, and software development, Zen3 delivers innovative solutions that drive digital transformation for businesses. In September 2024, Tech Mahindra announced the merger of Zen3 Infosolutions with Tech Mahindra (Americas) Inc., aiming to streamline operations and enhance service delivery in the region.
- Eventus Solutions Group LLC: Eventus Solutions Group is a US-based company specializing in customer experience (CX) consulting and contact center solutions. The acquisition has strengthened Tech Mahindra’s capabilities in delivering end-to-end customer engagement solutions. In November 2024, Tech Mahindra’s board approved the merger of Eventus Solutions Group with its parent company, Tech Mahindra (Americas) Inc., to further integrate services and optimize operational efficiencies.
- Tech Mahindra GmbH: It focuses on providing IT services and solutions tailored to the European market. The company offers a broad spectrum of services, including digital transformation, consulting, and engineering services, catering to industries such as automotive, manufacturing, and telecommunications. By leveraging local expertise and global resources, Tech Mahindra GmbH helps clients drive innovation and achieve business objectives in a competitive landscape.
Q3 FY25 & Business Highlights
- Revenue of ₹13286 crore in Q3 FY25 up by 1.4% YoY from ₹13101 crore in Q3 FY24.
- EBITDA of ₹1809 crore in this quarter at a margin of 14% compared to 9% in Q3 FY24.
- Profit of ₹989 crore in this quarter compared to a ₹524 crore profit in Q3 FY24.
- The active clients of tech Mahindra has decreased by 53 to1175 in Q3 FY25 and utilization rates of employees is 85.6%.
- Healthcare & Lifesciences segment has seen the highest growth as QoQ in revenue of 4.5% and following it BFSI seen 2.7% growth. But YoY growth is higher in BSFI compared to other segments.
- Total deal wins in this quarter is $745 Mn, which is great as it shows a high demand from its clients.
- Selected by a large German Telco to support their technology domains across Network, IT, and Service Operations, driving autonomous operations using GenAI.
- Awarded a global managed Network as a Service (NaaS) deal by a Europe based one of the largest chemical producers globally.
- Won a managed services deal from a leading global auto-maker for supporting their IT landscape covering every aspect of their business operations by leveraging our ADMS and Cloud & Infra Services capabilities.
- Tech Mahindra signed a multi-year Strategic Collaboration Agreement (SCA) with Amazon Web Services (AWS) to develop an Autonomous Networks Operations Platform (ANOP) designed for Communication Service Providers (CSPs) and enterprise customers.
Financial Summary
| INR Cr. | Q3 FY24 | Q3 FY25 | FY23 | FY24 |
| Revenue | 13101 | 13286 | 53290 | 51996 |
| Expenses | 11955 | 11477 | 45527 | 47489 |
| EBITDA | 1146 | 1809 | 7763 | 4506 |
| OPM | 9% | 14% | 15% | 9% |
| Net Profit | 524 | 989 | 4857 | 2397 |
| NPM | 3.9% | 7.4% | 9.1% | 4.6% |
| EPS | 5.23 | 10.05 | 49.6 | 24.14 |