India's Tech Mahindra jumps most in over six years as deal wins fuel growth optimism (updated)

Tech Mahindra

16/10/2026 05:42

Tech Mahindra shares settle about 8% higher
Company leads rise in Nifty IT index
Analysts say margins could rise as AI-related deflation eases and jobs scale up
Adds closing levels, analyst quotes, chart, bullets
By Saikeerthi .
Oct 16 (Reuters) - Tech Mahindra TEML.NS shares logged their biggest one-day percentage gain in more than six years on Friday, as investors welcomed strong deal wins and margin expansion, easing concerns about demand in an otherwise challenging environment for IT companies.
Shares of the company settled about 8% higher, leading the rise in the IT index .NIFTYIT, which rose 4.05%. India's benchmark Nifty 50 .NSEI closed up 0.65%. 
Analysts had warned of slowing growth across the IT sector. Still, earnings from peers such as Tata Consultancy Services TCS.NS and HCL Tech HCLT.NS suggest demand has remained broadly resilient despite growing concerns over AI-led disruption, with analysts expecting demand to improve.
“Demand remained broadly stable this quarter, in line with Accenture's outlook, and it could even improve if macroeconomic conditions become favourable. With AI adoption still in its early stages, AI tools are expected to create additional growth opportunities for IT services companies,” said Piyush Pandey, SVP Lead Analyst at Centrum Broking.
Indian IT companies have increasingly relied on large multi-year outsourcing contracts to help offset weak discretionary spending by global clients, with investors closely monitoring deal wins for visibility on future revenue growth. 
Tech Mahindra maintained its fiscal year operating margin target of 15% and said its focus will increasingly shift toward growth rather than profitability. 
Rishubh Vasa, research analyst at Indsec Securities viewed this shift positively, arguing it suggests Tech Mahindra's multi-year margin recovery is largely complete and management can now prioritize revenue expansion without sacrificing profits.
"The company will now focus on revenue growth. As AI-related deflation eases and AI-led work scales up, the benefits should increasingly flow through to margins," Vasa said, forecasting that margins could rise to 17%-18% over the next three years from 15%.

($1 = 94.7200 Indian rupees)  

 (Reporting by Saikeerthi in Bengaluru; Editing by Jochelle Mendonca and Mrigank Dhaniwala)
 ((Saikeerthi@thomsonreuters.com; (+91) 8296756080))