Tech Mahindra (TECHM) — concall transcript

📢 Key Event
Tech Mahindra reported Q4 FY24 revenue decline of 6.4% YoY on constant currency, improved operating margin to 7.4%, declared ₹40/share dividend, and announced $1.9B FY24 deal wins including $500M in Q4, targeting 15%+ EBIT margin by FY27.

🔄 What Changed
Operating margin improved to 7.4% in Q4; FY24 free cash flow reached $676 million; deal wins totaled $1.9B for FY24 including $500M in Q4; dividend increased to ₹40/share; margin target raised to >15% EBIT by FY27

🔮 What's Next
Target of >15% EBIT margin by FY27; 85% of free cash flow to be distributed to shareholders over five years; growth stabilization expected by FY25 year-end; margin expansion through cost discipline and organic growth; turnaround plan targeting FY25 as low point

💡 Investor Takeaway
Tech Mahindra is prioritizing margin expansion and shareholder returns through disciplined cost management and capital allocation, targeting sustainable profitability by FY27 despite near-term revenue pressure in communications.

Tech Mahindra reported a 6.4% YoY revenue decline in Q4 FY24 on constant currency, with full-year revenue down 4.7%, driven by weakness in communications. However, operating margin improved to 7.4% in Q4 and full-year free cash flow reached $676 million. The company declared a ₹40 per share dividend for FY24 and achieved $1.9 billion in FY24 deal wins, including $500 million in Q4. Management emphasized a 'scale at speed' vision targeting top-line growth above peers, industry-standard margins, and predictable profitability by FY27, supported by strategic focus on AI, digital transformation, and expansion in telecom, manufacturing, and banking. Capital allocation targets 85% of free cash flow to shareholders over five years, with ambitions to exceed 15% EBIT margins by FY27 and become a top-three peer in profitability. Initiatives include Project Fortius for $250M annual savings, margin expansion via pyramid optimization, and talent upskilling in GenAI. The turnaround plan targets FY25 as the low point, with growth stabilization expected by year-end and long-term value creation through organic growth and cost discipline.

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About Tech Mahindra Ltd (TECHM)

Information Technology · IT - Software · Listed on BSE

Market Cap: ₹1,58,965.4 Cr P/E: 28.0 ROE: 17.4% ROCE: 24.8% Div Yield: 3.14%

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"How will Tech Mahindra achieve 15%+ EBIT margin by FY27 given current 6% EBIT margin?" "What specific cost savings initiatives under Project Fortius will drive $250M annual benefits?" "How does the company plan to stabilize revenue growth in the communications vertical?"

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🔥 Also filed on 31 March 2024

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Source: Stock Announcements. Analysis by StockFin.ai. For informational purposes only — not investment advice.

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