Tech Mahindra: One of the top 5 IT Players

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Tech Mahindra is an Indian multinational company that provides information technology and business process outsourcing services. A subsidiary of the Mahindra Group. Having its headquartered in Pune and has its registered office in Mumbai. Tech Mahindra offers innovative and customer-centric digital experiences, enabling enterprises, associates and the society to Rise.

It is a USD 5.4 billion organization with 121,000+ professionals across 90 countries helping 1007 global customers, also including Fortune 500 companies. The company is focused on leveraging next-generation technologies including 5G, Blockchain, Cybersecurity, Artificial Intelligence, and more, to enable end to end digital transformation for global customers.

Tech Mahindra is also one of the fastest growing brands and amongst the top 15 IT service providers globally. 

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TechMNxt is company's strategic transformation approach. Powered by disruptive technologies, non-linear growth with platforms, collaborative disruption with new age partners, and FutureSkilling its 121+K associates. TechMNXt will help the company to deliver promise to its customers to Run Better, Change Faster and Grow Greater.

Powered by disruptive technologies, non-linear growth with Platforms, collaborative disruption with new age partners and FutuRising together towards a purposeful brand, it is the company's holistic approach to be future forward.

(A) About Mahindra Group

The Mahindra Group is a federation of companies. Headquartered in Mumbai, the Group employs over 2,50,000+ people across 100+ countries.

It operates in key industries that propel economic growth, such as tractors, utility vehicles, information technology, financial services and vacation ownership. Moreover The Group has a strong presence in agribusiness, aerospace, components, consulting services, defence, energy, industrial equipment, logistics, real estate, retail, steel, commercial vehicles and two-wheelers.

(B) Shareholding Pattern

Tech mahindra shareholding pattern for June 2021
Tech mahindra detailed research with shareholders holding more than 1 %

Their has not been any major change in promoters shareholding in the company over last 10 years. On the other hand, shareholding of Mutual funds has been fluctuating in the company. However Mutual funds holding increased in the company from last 10 years from around 6 % in 2012 to 9.48% in June 2021.

(C) Executive Board of Directors

(i) Anand G. Mahindra - Chairman, Mahindra Group

Mr. Anand Mahindra is the Chairman of Mahindra Group and the Executive Chairman of Mahindra & Mahindra Ltd. His tenure has seen the Group expand domestically and internationally into a range of major industrial sectors from automobiles and agriculture to IT and aerospace.

He has also served on several influential bodies globally, including the Global Board of Advisors of the Council on Foreign Relations, New York and the International Advisory Council of Singapore’s Economic Development Board. He is currently on the board of Invest India, the National Investment Promotion and Facilitation Agency.

(ii) Dr. Anish Shah - Managing Director and CEO, Mahindra Group

Mr Anish holds a PhD from Carnegie Mellon’s Tepper School of Business where his doctoral thesis was in the field of Corporate Governance. He also received a Master’s Degree from Carnegie Mellon and has a post-graduate diploma in Management from IIM.

His previous role was Group President (Strategy) and Member of the Group Executive Board. Mr Anish's prior role was President and CEO of GE Capital India, where he led the transformation of the business, including a turnaround of its SBI Card joint venture. He worked across multiple industries, including banking, oil rigs, paper, paint, steam boilers and medical equipment.

(iii) Mr Chander Prakash Gurnani - Managing Director and CEO of Tech Mahindra

A chemical engineering graduate from the National Institute of Technology, he is a distinguished and active alumnus of the Institute. CP has also received an honorary Doctorate degree by Veer Surendra Sai University of Technology and Sharda University. Moreover he is Board Member of Mahindra & Mahindra Ltd. Also he is promoter of Tech Mahindra Ltd.

In a career spanning 40+ years, CP has held several leading positions with Hewlett Packard Ltd, Perot Systems (India) Ltd. and HCL Corporation Ltd. CP has also served as a Chairman of NASSCOM for the year 2016-2017.

(D) Revenue Segments of Tech Mahindra

(a) Tech Mahindra Revenue by Industry Verticals

Tech mahindra detailed research with vertical revenue breakup

Company done its business across 6 major industries. The demand push back in the first half impacted few verticals the company operate in, including Communications, Manufacturing and Healthcare. However, The second half saw a revival in the spends and newer revenue streams leading to growth across most of these verticals.

(b) Tech Mahindra Revenue by Geography

Tech mahindra detailed research with geography mix

(E) Services offered by Tech Mahindra

Tech mahindra services

(F) Key Operational Parameters

(i) Location of Employees

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Tech mahindra detailed research with onsite offshore mix

(ii) Employee Statistics of Tech Mahindra

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Tech Mahindra detailed research with employee statistics

IT companies should maintain proper utilization level. The employee Utilization rate of Tech Mahindra is all time high which is not a good sign. However, the management is planning to hire new employees in coming quarters. Thus the management believes that hiring new employees will help in balancing the utilization rate. On the other hand the attrition rate is down by 5% Y-O-Y which is good for IT companies.

Tech Mahindra detailed research with Employee cost

(iii) Client Statistics

Tech Mahindra detailed research with client contribution
Tech mahindra client distribution for Q1 FY22

More than 40% of the revenue comes from top 20 clients. On the other hand, top 5 clients contribute around 20%. Thus the company has moderate risk of client concentration.

Tech Mahindra detailed research with active clients

More than 90% of the business is from repeated clients which is good for IT companies. Which shows that the clients have trust on company's business. In addition the company has well diversified client base which is the key strength of the company.

(G) Acquisitions done by Tech Mahindra in FY 21

Cerium Systems Private Limited (CERIUM)

  • The Company on April 9, 2020 acquired 51% of the share capital of Cerium Systems Private Limited (Cerium). The enterprise value of Cerium is Rs 2,450 million. Cerium is an integrated circuit and embedded software design service provider that is expected to help bolster Tech Mahindra’s capabilities in the areas of semiconductor design and testing, embedded software development / testing and product engineering.
  • The remaining 49% to be acquired over the next three years at a valuation linked to the financial performance of Cerium. During the year, the Company acquired a further 6% stake thereby taking the total shareholding to 57%.


The Company on April 9, 2020, acquired 100% of the share capital of Zen3 for a cash consideration of USD 64 million, out of which USD 35 million was paid upfront, USD 4 million will be paid over two years and maximum upto USD 25 million will be paid over three years linked to financial performance.


  • The Company acquired 100% of the share capital of Tenzing Ltd and Tenzing Australia Ltd (Tenzing Group) through its wholly owned subsidiary Tech Mahindra (Singapore) Pte Ltd at a consideration of USD 29.5 million including earnouts.
  • The Company is headquartered in Auckland, New Zealand and is engaged in the business of Management Consulting, Digital Transformation and Technology services. Moreover It has 145 employees and a turnover of USD 27.4 million.


  • Momenton Pty. Ltd. (“Momenton”) was acquired by the Company through its wholly owned subsidiary viz., Tech Mahindra (Singapore) Pte Limited. At a total consideration upto AUD 14.3 million including earnouts.
  • The company is headquartered in Melbourne, Australia and has approximately 55 employees. Moreover Turnover for the financial year ended 30th June 2020, was AUD 10.8 million.
  • Further The company was acquired on 12th February 2021.


  • The Company acquired 70% of Perigord Asset Holdings Limited (“Perigord”) through its wholly owned subsidiary Mahindra Engineering Services (Europe) Ltd at a consideration of EUR 21 Million and the remaining 30% will be subsequently acquired over the next four years at a valuation linked to financial performance of the company.
  • Perigord is headquartered in Dublin, Ireland with a presence in Germany, USA and India with 380 employees. Moreover For the financial year ending 31st December 2020, the company had revenue of EUR 19.5 million.


The Company announced the acquisition of Payments Technology Services Limited, Hongkong on 12th January 2021 at a consideration of USD 9 million. The company is headquartered in Hong Kong and has approximately 109 employees. Turnover of the Company for the financial year ended 31st December 2019 was USD 5.4 million.


  • The Company announced the acquisition of DigitalOnUs, Inc. (“DigitalOnUs”) on 19th April 2021 at an enterprise value of USD 120 million through its wholly owned subsidiary, Tech Mahindra (Americas) Inc. The company is headquartered in San Jose, California, USA. DigitalOnUs is focused on Cloud Native Development and Hybrid Cloud Automation services.
  • The Indian subsidiary of DigitalOnUs namely DigitalOps Technology Private Limited has been acquired by the Company.


The Company announced the acquisition of Eventus Solutions Group, LLC. (“Eventus”) on April 26, 2021 through its wholly owned subsidiary Tech Mahindra (Americas) Inc. at a consideration of USD 44 million.

(G) Other Competing IT Players

Key IT players with detailed research of tech mahindra
IT players major sectors

(H) Financial Parameters

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Tech Mahindra detailed research with financials

(I) Segment Result

Tech mahindra segment revenue

(J) Management Discussion & Concall Highlights

(i) Key Deal wins

The company really had an uptick in the amount of deals signed. Tech Mahindra did about a billion dollar plus compared to the previous three quarters in Q4 of FY21, where there were $400, $450 million. So, as per the management, there is a pipeline, there is a deal momentum, there is an execution momentum. Hence, the management is confident that the growth will be double-digit. The TCV of deal wins for Q1 FY22 is similar to the value in Q4 FY21 as stated by management.

In 5G, the company is seeing healthy growth in cloud ecosystem, 5G for enterprise (is yet to play out) and network modernisation. TechM has said that it will not focus on high volume low margin business. Deal TCV is healthy led by large deals and is expected to see healthy traction

Communication segment to witness improving growth led by demand from legacy modernisation, 5G, customer care, automation, network and cloud.

TechM won large deals well distributed across verticals: 2 Healthcare, 2 Communication, 1 BFSI, 1 Technology, 1 E&U, 1 Manufacturing, 1 Transport, 1 Public Sector.

(ii) Acquisitions

As stated above, the acquisitions done by the company will help the company to expand and grow. Moreover it will increase its reach and momentum in customer experience management, human experience management, cloud and cyber security.

(iii) Highest Dividend in History

The board recommended a dividend of Rs.30 per share comprising of Rs.15 normal dividend and special dividend of Rs.15. This will take total dividend to Rs.45 per share. Thus this dividend is highest in the history of the company. As a result it's a kind of indication about how company approach the future. So, with this dividend policy management believes that they will return the excess cash generation after retaining the money for acquisition and for the internal improvements.

(1v) Investment in 5G

The company has been making increased investments in the area of 5G, customer experience, Data, and IoT. Also The company signed large 5G deal in 4QFY21. Telcos are spending on migrating to 5G. The management expects higher spends over the next 2-3 years, along with smaller network service deals.

(v) Concall Highlights of Q1FY22

  • The net profit after tax of the company for the quarter was about $183.2 million versus $147.7 million in Q4 FY21. Which is primarily led by the higher other income of $34.4 million coming out of higher income on surplus fund invested, as well as FOREX gain.
  • The management is expecting growth in TCV (Total Contract value) in all the sectors and the company already has highest ever TCV and moreover management expects the momentum to grow in future as well.
  • The company is facing high employee attrition rate. On the other hand, the employee utilization rate is also at all time high.
  • Moreover the management is planning to increase the number of employee headcount by doing more hiring and recruitment. Employee count grew by 5,200 employees in Q1 FY22, after a net headcount reduction of 9,780 employees in the past five quarters.
  • As per management the investments made by the company during FY 21 on the acquisitions are already showing good growth and opportunities for the company.
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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry's Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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