# 1. Financial Performance ## A. Key Figures * **Revenue (Full Year):** **USD 6.385 Bn** (+1.9% reported; +0.6% CC) * **Revenue (Quarterly):** **USD 1.625 Bn** (+4.9% YoY; +2.4% CC) · **₹15,076 Cr** (+12.6% YoY) * **Operating Profit:** **USD 797 Mn** full-year (+31.4%) · **₹2,084 Cr** quarterly (+48%) * **Operating Margin:** **12.6%** full-year (+290 bps) · **13.8%** quarterly (+70 bps QoQ) * **PAT (Quarterly):** **₹1,354 Cr** (+6.7% YoY) · **9%** Margin * **Cash & Liquidity:** **USD 616 Mn** FCF (115% of PAT) · **USD 892 Mn** Cash & Equiv. · **89 Days** DSO * **Dividends:** **₹51/share** total FY payout · **104%** of PAT ## B. Revenue Growth & Market Dynamics * **Sector-Specific Momentum:** Growth was anchored by robust performance in Retail, Travel, and Logistics (+7.3%), Manufacturing (+5.9%), and BFSI (+3.7%). * **Sequential Recovery:** Constant currency growth showed a consistent four-quarter upward trajectory, rising from negative territory to **2.4%**, fueled by large deal wins despite a muted macro environment. * **Competitive Differentiation:** Outperformed peers in the Retail/CPG segment by leveraging design capabilities and capitalizing on "vendor fatigue" among clients seeking non-cannibalizing partners. * **Platform Resilience:** Management noted that transitions to SAP, Salesforce, and low-code platforms—previously viewed as threats—have evolved into significant growth drivers. ## C. Margin Expansion & Operational Efficiency * **Sustained Margin Trajectory:** Achieved 10 consecutive quarters of linear expansion, nearly doubling exit margins from **6.4%** to the current quarterly high. * **Project Fortius & AI Gains:** Profitability was bolstered by pricing actions, subcontractor optimization, and a **7% productivity improvement** specifically attributed to AI-led initiatives. * **Future Profitability Levers:** Management identified an **8% margin gap** between Fixed Price (FP) and Time & Materials (T&M) projects as a primary opportunity for further expansion in FY27. * **Quality of Earnings:** Shifted focus toward high-margin specialized service lines, including Engineering, Data AI, and Consulting, while utilizing the BPS division as a transformation engine. ## D. Capital Allocation & Outlook * **Record Shareholder Returns:** Distributed the highest-ever dividend in company history, with the payout ratio exceeding the stated capital allocation policy at **91% of FCF**. * **Efficiency Targets:** Management is targeting a Return on Capital Employed (ROCE) of **30%** by next year, up from the current **26%**. * **Investment Strategy:** Future capital will be prioritized for "humongous" investments in AI and strategic **tuck-in M&A** to enhance specific capabilities rather than large-scale acquisitions. --- # 2. Strategic Initiatives ## A. Key Figures * BPS Transformation: **close to one-tenth** Current business influenced by new tech/AI ## B. Project Fortius Progress * **Three-Year Transformation:** Management is executing a long-term strategic roadmap (initiated April 2024) aimed at achieving a resilient, margin-accretive organization by **FY27**. * **"Return of the Builder" Philosophy:** The firm is positioning itself for a Y2K-style modernization era, prioritizing deep industry knowledge and platform expertise over generic services. * **Operational Efficiency:** Focus remains on reshaping corporate culture and leveraging **Mahindra Group** synergies to drive organizational transformation and ESG goals. ## C. AI-Native Transformation * **Commercial Model Pivot:** Transitioning from traditional T&M/Fixed-price to an **AI-native commercial model** integrated across eight strategic themes via the **TechM Helix** platform. * **Modernization Strategy:** The "AI delivered right" framework focuses on bridging legacy stacks with new AI layers, specifically targeting technology debt at the data and application levels. * **Productivity & Investment:** Prioritizing AI to enhance margins within fixed-price programs; management is committed to increasing GenAI spend despite broader margin delivery targets. ## D. Organizational Restructuring * **Structural Simplification:** Efforts are underway to clarify roles and simplify delivery organizations to enhance agility under the **"Scale at Speed"** narrative. * **Vertical Specialization:** Restructured the **BFSI** unit into three distinct segments (Banking, Insurance, and Banking Products) to deepen domain expertise and leadership. * **Portfolio Diversification:** Actively pursuing organic growth in non-telecom sectors to balance the historical telecom-heavy revenue mix and improve long-term durability. ## E. Talent Pyramid Optimization * **Expert-Led Delivery:** Shifting toward a high-experience talent model, hiring industry veterans with decades of practical knowledge to meet client demand for deep system understanding. * **Pyramid Rebalancing:** While focusing on senior domain expertise, the firm continues programmatic fresher hiring to optimize cost structures, particularly for transformational fixed-price projects. --- # 3. Technology & Innovation ## A. Agentic AI Platforms * **Strategic Ecosystem Partnerships:** Launched an ontology-driven platform with **Microsoft** (utilizing Fabric and Azure AI) and a telco-specific reasoning agent with **NVIDIA** to enable Level 4+ autonomous networks. * **Large-Scale Deployment:** Transitioning from POCs to enterprise-wide adoption via the **Orion platform**, which features a "maker and checker" model and orchestrates workflows across **200+ internal agents** and **20,000+ bots**. * **High-Impact Client Use Cases:** Implementing autonomous shopping assistants for **Kroger**, zero-touch service desks for **Enbridge**, and domain-specific Small Language Models (SLMs) for **Telefonica**. * **Pervasive AI Integration:** Generative AI infusion has reached **90%-95% of top accounts**, with nearly every active project now incorporating AI technology despite the lack of a standalone revenue metric. * **Consulting-Led Transformation:** Utilizing a "consulting-first" lens to help clients prioritize ROI and establish Centers of Excellence (COEs) for remediating **billions of lines of legacy code**. ## B. Proprietary LLM Development * **Sovereign & Domain-Specific Models:** Building on the **Indus LLM** to develop sovereign and industry-specific models, supported by participation in the **India National AI Mission**. * **Specialized R&D:** Showcasing vertical-specific capabilities in manufacturing and SDLC changes, alongside research in quantum computing with **University College London**. * **Contextual Orchestration:** Leveraging deep domain expertise to stretch frontier models into specialized agents, focusing on **contextualization** to navigate complex regulatory environments like wealth management. ## C. Service Token Model * **Outcome-Based Pricing Evolution:** Shifting from traditional productivity-based pricing to a **"service token" model** that quantifies the combined output of digital and human labor. * **Enhanced Transparency:** Utilizing "vector squads" to break down sub-processes into tokens, allowing clients to track the evolving cost ratio between human and automated labor. ## D. Internal Upskilling Programs * **Workforce Readiness:** Achieved a **80% AI-trained workforce** through a tiered "belt" certification process (White to Black belt) and the **Claude Core** training program. * **Advanced Tooling Adoption:** Integrating AI engineering platforms such as **Devin, Cursor, and Cognition** to establish an AI-first delivery structure. * **Academic & Research Depth:** Leveraging **Mahindra University’s 700+ faculty** and specialized life sciences labs to drive deep research and a performance-oriented learning culture. --- # 4. Vertical & Geography Mix ## A. Key Figures * **Vertical Growth (QoQ):** **8.0%** BFSI · **2.5%** Hi-Tech · **1.8%** Communications * **Geographic Growth (YoY):** **8.9%** Europe · **Flat** Americas ## B. Manufacturing Performance * **Sector Leadership:** Manufacturing emerged as the premier vertical this year, with double-digit annual growth fueled by organic diversification into aerospace and defense. * **Strategic Pivot:** Offsetting a softer US automotive market through a ramp-up in European auto clients and industrial process manufacturing. * **Operational Excellence:** Secured the **Diamond Supplier Certification from Bombardier** for the third consecutive time, validating high-end aerospace engineering capabilities. * **Future Readiness:** Investing in "physical AI" to develop "factories of the future" and shifting commercial models to move beyond simple productivity-linked AI. ## C. BFSI Specialized Focus * **Differentiated Strategy:** Avoiding a broad-market approach to focus on four high-margin niches: payments, asset/wealth management, insurance, and core banking. * **AI-Driven Execution:** Successfully utilized AI for complex transitions, including ingesting **2-3 years of incident logs** for AIA and overcoming multilingual barriers for Manulife Japan. * **Strategic Partnerships:** Established a consulting and managed services partnership with **FICO** to deliver advanced analytics and AI-powered decisioning. * **Growth Outlook:** Segment performance is currently outpacing the broader portfolio, with acceleration expected in **FY27** driven by new Forbes 2000 client acquisitions. ## D. Telecom Leadership Recovery * **Stabilization & Recovery:** Vertical growth supported by stabilized spending from the largest US client and a second consecutive year of double-digit growth from **Comviva**. * **Margin of Safety:** Resilience is anchored by a global footprint of **100+ operators**, reducing concentration risk and diversifying across IT, BPS, and network services. * **Infrastructure Play:** Building technical moats by maintaining **NVIDIA and Google Tensor clusters** for telcos providing GPU-as-a-service. * **Pipeline Visibility:** Management anticipates **two major mega deals** will support the growth trajectory into **FY27**, reaffirming leadership in this core vertical. ## E. Geographic Performance * **European Momentum:** Strong high-single-digit growth led by aerospace and industrial sectors; the region maintains a robust deal pipeline. * **Regional Rationalization:** Prioritizing scale in North America, Europe, and APJ while actively exiting subscale geographies to optimize the footprint. * **Americas Headwinds:** Performance remained stagnant as gains in Communications were neutralized by a substantial decline in the U.S. automotive business. --- # 5. Customer & Deal Metrics ## A. Key Figures * **Annual Deal Wins:** **USD 3.79 Bn** Total FY26 (+42% YoY) * **Quarterly Bookings:** **USD 1.07 Bn** (+35% YoY) * **$50M+ Clients:** **29** Total (+4 YoY) * **$20M+ Clients:** **66** Total (+7 YoY) * **New Clients:** **182** Total (including **63** "must-have" accounts) ## B. Large Deal Wins * **Record-Breaking Momentum:** Achieved highest-ever deal wins in several years, anchored by consecutive mega-deals and a shift toward strategic partnership over traditional outsourcing. * **Strategic Partnerships:** Secured a five-year global AI and cloud partnership with **Orange Business** and a sole-source infrastructure deal with a **Fortune 500 energy major**. * **Margin-Centric Approach:** Management is prioritizing deal quality and margin-accretive contracts, ensuring new wins outperform the **2024 vintage** and older portfolios. * **AI Resilience:** Despite the rapid evolution of agentic AI, the company has seen no significant delays in large deal signatures or closures. ## C. Client Tier Expansion * **Account Deepening:** Robust growth in large-scale client tiers driven by the "Turbocharge" program, which focuses on top-tier accounts while strategically "trimming the tail" of smaller, low-margin accounts. * **GenAI Ubiquity:** Approximately **95%** of peak and prime accounts have now integrated Generative AI solutions into their operations. * **GCC Strategy:** Adopted a flexible "co-opetition" model to address the rise of Global Capability Centers, acting as both a vendor and partner to optimize client costs. * **Geographic Delivery:** Expanding AI and end-user service delivery through centers in **India and Mexico** for long-term partners like Kroger and Enbridge. ## D. Net Promoter Score (NPS) * **Industry Leadership:** Attained the **#1 industry ranking** for NPS, moving from the median to the top quartile within two years. * **CXO Satisfaction:** The most significant satisfaction gains were recorded among senior and CXO-level clients, validating the firm's value-delivery transformation. ## E. Pipeline Quality * **FY27 Outlook:** Maintains a healthy, high-quality pipeline across Manufacturing, BFS, and Energy, with strong conversion expectations for the upcoming fiscal year. * **Pragmatic Productivity:** Clients are largely bypassing long-term productivity debates to lock in current speed and savings advantages offered by evolving AI models. --- # 6. Risks & Macro Factors ## A. Key Figures * **Vertical Growth:** **-2.7%** Hi-Tech YoY · **-0.6%** Healthcare YoY * **Hedge Book:** **$750M** Total Value (vs. $1.05B QoQ / $1.96B YoY) ## B. Discretionary Spend Volatility * **Vertical Headwinds:** Hi-Tech and Healthcare sectors faced contraction due to semiconductor client restructuring and regulatory policy challenges, though stabilization is emerging. * **Growth Outlook:** Management projects accelerated momentum in **FY27** compared to the current fiscal, citing systemic resilience despite risks of project cancellations. * **Historical Context:** Leadership views current technological shifts as growth catalysts rather than deflationary threats, drawing parallels to the dot-com and cloud eras. ## C. Geopolitical & Currency Risks * **Hedging Strategy Shift:** Significant reduction in the hedge book follows a strategic pivot to shorten hedge tenures from **two years to one year**. * **Risk Mitigation:** Geographic diversification and a broad partner ecosystem (hyperscalers/AI builders) serve as buffers against currency volatility and regulatory shifts. * **Macro Dependencies:** Recovery in the **D. S. auto sector** is expected to drive growth, contingent on the containment of geopolitical tensions in the Middle East. ## D. Project Cancellation Risks * **Governance Frameworks:** Enhanced delivery excellence utilizes a predictability-focused model with early warning signals to mitigate risks in client programs. --- # 7. Guidance & Outlook ## A. Key Figures * **EBIT Margin Target:** **15%** by FY27 * **Industry Growth Estimate:** **2%-4%** to **3%-5%** range for the upcoming year * **Revenue Growth Target:** **Above peer group average** (Organic CC) ## B. FY27 Financial Targets & Transformation * **Critical Transition Year:** FY27 marks the final and most vital stage of the three-year roadmap, shifting from stabilization to **accelerated growth and margin expansion**. * **Strategic Execution:** Management is pivoting R&D investments and vertical expertise into concrete financial outcomes to bridge the gap between strategy and execution. * **Operational Consistency:** Sustainable growth targets are being pursued through a unified operational strategy across the **IT, Comviva, and BPS** divisions. ## C. Industry Outperformance Goals * **Relative Growth Benchmark:** Leadership has decoupled guidance from absolute figures, committing instead to **outperforming the industry** despite expectations of conservative market growth. * **Positive Trajectory:** The outlook is supported by a successful reversal of momentum, moving from **negative year-on-year growth** to a consistent upward trend. ## D. Long-term Margin Roadmap * **Profitability Drivers:** The path to the targeted EBIT margin relies on high-margin service lines, productivity streams, and "repetitive rigor" in operations. * **Risk Mitigation:** Management plans to balance potential **FX tailwinds** against headwinds including volume uncertainties and broader growth pressures to protect the margin floor.