The sluggish growth among IT service companies was clearly visible from June 2025 quarterly results that were declared over the past few days. And it was also reflected in the performance of Tech Mahindra, which declared its results after the close of Wednesday trading.
Takeaways from June 2025 quarter results
Tech Mahindra reported a fall of 0.2 % on a quarter-on-quarter basis in its consolidated revenues at Rs 13, 351 crore for the June 2025 quarter. Earlier in the week, New Delhi-based HCL Tech reported revenues of Rs 30,349 crore in the June 2025 quarter, and on a constant currency basis revenue was down 0.8 % quarter-on-quarter.
To Tech Mahindra’s credit its core operating profit margin expanded 50 basis points q-o-q to 14.5 % in the first quarter of FY25, and that was thanks to a tight check on key costs like employee benefit expenses.
In contrast, HCL Tech‘s core operating profit margin was 19.9 % in the June 2025 quarter, a fall of 150 basis points on a q-o-q basis.
Also, new deal wins for IT service companies has been mixed amidst the tariff war of the Trump administration.Tech Mahindra reported new deal wins (TCV) of $ 809 million in the June 2025 quarter vis-à-vis $ 798 million in the March 2025 quarter.
In contrast, HCL Tech’s TCV (new deal wins) amounted to $ 1.81 billion at the end of the June 2025 quarter vis-à-vis $ 2.99 billion at the end of the March 2025 quarter.
Meanwhile, Tech Mahindra reported a 1 % q-o-q fall in its net profit to Rs 1,128 crore in the June 2025 quarter. HCL Tech’s net profit was Rs 3,844 crore in the June 2025 quarter, a fall of 10.8 % on a q-o-q basis.
HCL Tech has marginally raised its FY 26 growth outlook – it has highlighted company revenue growth is expected to be between 3 – 5 % y-o-y in constant currency vis-à-vis its earlier forecast of 2 – 5 % y-o-y in constant currency that was made while declaring its fourth quarter of FY 25 results in April 2025.
Tech Mahindra has not provided a specific growth forecast for the financial year.
Investors on Dalal Street
The Tech Mahindra stock had gained 1.9 % to Rs 1,609 at the end of Wednesday, and it has risen considerably from its 52-week low of Rs 1,209.7 that was reached on 7 April 2025.
The HCL Tech stock hit a 52-week low of Rs 1,304 on 7 April 2025 and it ended Wednesday’s trade 0.3% lower at Rs 1562.9.
Investors on Dalal Street have been skeptical on the growth outlook for IT services companies, given the muted growth in IT spending in the key US market amidst the tariff war of the Trump administration.
Valuations
Tech Mahindra trades at a P/E of nearly 32 times estimated consolidated FY 26 earnings. Meanwhile, HCL Tech trades at a P/E of nearly 25 times estimated consolidated FY 26 earnings.
And, with no clear signs of improvement in IT spending in the key US market over the next few quarters, investors could adopt a wait-and-watch attitude for stocks in this sector. And if there is a further downside in the stock prices in the IT sector, perhaps it may be a good time for some bottom fishing for long term ideas.
Amriteshwar Mathur is a financial journalist with over 20 years of experience. The writer and his family have no shareholding in any of the stocks mentioned in the article.
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