Tech Mahindra Q2 Margin Misses, AI Becomes Key Test

Tech Mahindra's operating margin landed at 14.8% in the September quarter, short of the 16.1% analysts had penciled in, though still within reach of the company's 15% full-year target. The result caps twelve straight quarters of margin gains, a streak that's now colliding with a harder problem: what happens to profitability once AI starts doing the work that used to justify the headcount.

Revenue rose 7.2% year on year in constant currency to $1.693 billion, and the company signed deals worth $1.023 billion in the quarter, pushing trailing twelve-month contract value to $4.27 billion, up nearly 35% from a year ago. Those numbers point to demand. What they don't show is how much of that work is AI-driven, or whether Tech Mahindra can keep a meaningful cut of the savings automation generates before clients come asking for their share back. The company says it will start breaking out AI revenue separately from the second half of FY27, a move that should make clearer whether the next phase of growth is replacing old revenue or adding to it.