Investors on Dalal Street had turned very cautious on Wednesday towards the broader IT sector, given HCL Tech’s disappointing constant currency 3.3% q-o-q decline in revenues in the March 2026 quarter, and its lacklustre growth forecast for FY26.
As a result, investor expectations with regard to Tech Mahindra’s March 2026 quarter results were rather muted.
Tech Mahindra’s performance in the March 2026 quarter
Tech Mahindra – Growth in Revenue (constant currency)
| Quarter | Q-o-Q growth (%) |
| March 2026 quarter | 0.6% q-o-q |
| December 2025 quarter | 1.7% q-o-q |
IT companies have largely reported sluggish growth in revenues q-o-q in the March 2026 quarter on a constant currency basis.
Tech Mahindra grew its revenue (constant currency basis) by 0.6 % q-o-q in the March 2026 quarter to Rs 15,076 crore, and that was slower than the growth it reported in Q3FY26.
Tech Mahindra grew its revenue (constant currency basis) by 1.7 % q-o-q in the December 2025 quarter to Rs 14,393 crore in the quarter under review.
Sluggish growth for Tech Mahindra in Q4FY26 comes at a time when it has faced a tough operating environment in several verticals. No doubt its key communications vertical grew 1.8% q-o-q to account for 33.4% of its total revenues in Q4FY26.
However, retail, logistics and transport were 8.2% of total revenues in the March 2026 quarter, a fall of 5.3% q-o-q. Also, in its healthcare and life sciences vertical, it accounted for 7.3% of its total revenues in the March 2026 quarter, a decline of 0.8% q-o-q.
Earlier, HCL Tech had highlighted that its constant currency revenues was negative 3.3% q-o-q to Rs 33,981 crore in the March 2026 quarter. HCL Tech’s performance in Q4FY26 was much worse that what it reported in the December 2025 quarter.
The third and fourth quarters of a financial year are typically seasonally weak quarters for IT companies. In the March quarter, clients in US and Europe are often still deciding the size of IT budgets for the calendar year, and which projects they will focus on.
Operating margins in Q4FY26
Tech Mahindra grew its operating profit margin 60 basis points q-o-q to 17% in the March 2026 quarter, and that was owing to a tight check on its key employee costs. Its total employee head count fell by 1,993 q-o-q in Q4FY26.
As a result, its employee costs at 51.7% of total revenues in the March 2026 quarter as against 52.5% in the December 2025 quarter.
A tight check on operating costs coupled with a low base effect helped Tech Mahindra’s net profit rise 21.3% q-o-q to Rs 1,356.4 crore in the March 2026 quarter. It had faced a one-time cost of Rs 272.4 crore in the December 2025 quarter related to the new employee code.
The Mumbai-based company’s core operating profit margin also improved 90 basis points q-o-q to 16.4% in the December 2025 quarter.
Earlier, HCL Tech’s core operating margin declined 220 basis points q-o-q to 19.5% in the March 2026 quarter. The key cost, employee expenses, were 57% of its consolidated revenues in the March 2026 quarter as compared to 55.7% in the December 2025 quarter.
The company added nearly 802 employees q-o-q in the March 2026 quarter.
The Talent War – divergent trends for the long-term
Tech Mahindra’s total head count was 147,623 in the March 2026 quarter as against 149,616 employees in the December 2025 quarter
In contrast, HCL Tech’s head count was 227,181 in the March 2026 quarter as against 226,379 in the December 2025 quarter.
AI-related revenues – future growth driver for IT companies
Tech Mahindra has not provided specific revenues from its AI business in the March 2026 quarter. The company has highlighted several AI projects that it has won in the quarter under review and currently implementing on a global scale.
For HCL Tech, its growth in AI-revenues was fairly lacklustre – its Advanced AI Revenue at $155 million (nearly Rs 1,426 crore), a growth of 6.1% in constant currency terms on a q-o-q basis in the March 2026 quarter.
In the December 2025 quarter, HCL Tech’s Advanced AI quarterly revenue at $146 million (nearly Rs 1,314 crore), up 19.9% on a quarter-on-quarter basis on constant currency terms.
Globally, AI is driving growth in the IT sector and investors will also be monitoring AI-revenue growth for Tech Mahindra and other Indian IT service companies.
Growth forecast – A Glimpse into FY27
Tech Mahindra has not provided a specific growth forecast for FY27.
Earlier,HCL Tech has guided for slower growth in FY27 – it expects services revenue growth to be between 1.5% – 4.5% y-o-y in constant currency terms for FY27.
In contrast,HCL Tech while declaring its Q3 FY26 results in January 2026 said it expected its services revenue growth to be between 4.75%-5.25 % y-o-y in constant currency for FY26
Tech Mahindra vs. Peers: The Valuation Gap Widens
Here’s a look at the valuations of key IT services companies.
Is the Tech Mahindra stock attractively priced?
| Name of IT Company | Consolidated P/E |
| Tech Mahindra | 29.8 |
| HCL Tech | 20.0 |
| Infosys | 17.9 |
Investors were disappointed with HCL Tech’s quarterly results and growth forecast that were declared late Tuesday evening, and it affected the broader IT stocks on Wednesday.
Tech Mahindra declared its March 2026 quarter results during Wednesday trade, and the stock fell 2.4% to Rs 1,464.
Tech Mahindra trades at a consolidated P/E of 29.8 times
HCL Tech stock crashed 10.8% to Rs 1,286 on Wednesday, and the stock is hovering above its 52-week low of Rs 1,275.7 that was reached on 16 March 2026.
HCL Tech trades at a consolidated P/E of 20 times.
Larger rival, Infosys trades at a consolidated P/E of 17.9 times. Infosys will declare its results on April, 23.
The results of key IT services companies announced so far have ranged from disappointing to mediocre. As more results come in, it remains to be seen are declared whether this pattern holds or then some companies are able to generate growth in this environment.
It may be a good idea to add these IT services stocks to your watchlist to track these developments.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
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