Posted on April 25, 2025, by Niftynews
Shares of Tech Mahindra tumbled nearly 5% on April 25, 2025, following the company’s disappointing fourth-quarter results for fiscal year 2024–25. During the day, the stock dropped as much as 4.7% to ₹1,375 per share, marking its worst intraday loss since April 7 this year. However, the shares slightly recovered, trimming the loss to 1.93% by midday, trading at ₹1,415.
Despite this, Tech Mahindra shares have faced significant headwinds, having fallen 17% in 2025 thus far, compared to a modest 1.2% gain in the benchmark Nifty50 index. Here’s an in-depth look at the earnings breakdown and analyst outlook for the company.
Q4 Earnings Breakdown: Revenue Misses Expectations
For the fourth quarter of FY25, Tech Mahindra reported a profit of ₹1,167 crore, marking an impressive 76.5% year-on-year (YoY) growth. Sequentially, the bottom line grew by 0.7%. However, its revenue for the quarter was ₹13,384 crore, which showed a 4% YoY increase but still fell short of analysts’ expectations of ₹13,457.8 crore, according to Business Standard.
In US dollar terms, Tech Mahindra’s revenue was flat YoY and saw a slight decline of 1.2% quarter-on-quarter (QoQ). This revenue miss, particularly in the communications and hi-tech verticals, contributed to the significant drop in Tech Mahindra shares.
Tech Mahindra’s Deal Pipeline: A Positive Sign
On a brighter note, Tech Mahindra signed a Total Contract Value (TCV) of $2.7 billion for FY25, a 42% increase YoY. For Q4, the company signed $798 million in TCV, up from $745 million in the December quarter. This indicates that, despite some weaknesses in specific segments, there is continued demand for the company’s services, particularly in areas outside of communications.
Challenges in Communications Vertical: Impact on Tech Mahindra Shares
A major concern highlighted by Tech Mahindra’s management was the continued weakness in its communications vertical, which accounts for over a third of the company’s total revenue. In Q4, this segment saw a decline of 2.2% YoY, largely attributed to macroeconomic headwinds and a prolonged downturn in the sector.
Mohit Joshi, CEO and MD of Tech Mahindra, mentioned that despite these challenges, the company is beginning to see signs of stability returning, particularly in the European and Asia Pacific markets. However, this revenue drop significantly impacted Tech Mahindra shares, leading to the sharp decline on April 25.
Management Commentary: Transformation Underway
Mohit Joshi also shared his outlook on the company’s transformation journey. He stated that Tech Mahindra had laid a strong foundation this year, particularly focusing on its turnaround efforts. He acknowledged that the business environment had changed significantly since January, with increased excitement among clients in the US. However, this enthusiasm has been dampened by ongoing volatility in the market, particularly in the manufacturing sector.
While Tech Mahindra continues to focus on growth through its transformation, it remains clear that the company’s reliance on the communications vertical remains a critical factor in its overall performance. The volatility in this sector has caused significant uncertainty for Tech Mahindra shares, which may continue to struggle unless improvements are seen in this segment.
Tech Mahindra Shares: What’s Next for Investors?
The drop in Tech Mahindra shares raises concerns for investors, particularly those who have seen the stock decline by 17% in 2025. Despite some positive signals, such as the growth in deal pipeline and the transformation efforts underway, the continued weakness in the communications sector and revenue misses have created caution among market analysts.
As of now, analysts are closely monitoring the company’s efforts to stabilize its communications vertical and expand its growth in other sectors. For Tech Mahindra shares to recover, investors will likely need to see sustained growth in non-communications verticals and a return to stronger performance in the company’s key markets.
Conclusion: Should You Buy Tech Mahindra Shares?
With Tech Mahindra navigating through a period of transformation, investors need to remain cautious. While the company’s TCV growth and management’s focus on turnaround are encouraging, the decline in revenue from communications could continue to weigh on the stock.
Investors should keep a close watch on upcoming quarterly results for further signs of improvement. If the company can stabilize its communications vertical and continue to grow in other sectors, there may be a potential upside for Tech Mahindra shares in the longer term.
However, until there is a clearer path forward, Tech Mahindra shares may face continued volatility in the near future.
