Tech Mahindra LimitedSharda Centre, Off Karve RoadPune 411004, Maharashtra, IndiaTel: 91 20 6601 8100Fax: 91 20 2542 ered Office:Gateway Building, Apollo BunderMumbai 400 001, IndiaCIN: L64200MH1986PLC04137028th July, 2022To,BSE LimitedPhiroze Jeejeebhoy Towers,Dalal Street,Mumbai - 400 001Scrip Code : 532755National Stock Exchange of India LimitedExchange Plaza, 5th floor,Plot No. - C/1, G Block,Bandra-Kurla Complex, Bandra (E)Mumbai - 400 051NSE Symbol : TECHMSubject: Transcript of the earnings conference call for the quarter ended 30th June, 2022Dear Sir/Madam,In terms of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015 read with Para A of Part A of Schedule III, please find enclosed the transcriptof the earnings conference call for the quarter ended 30th June, 2022 conducted after themeeting of the Board of Directors held on 25th July, 2022, for your information and records.The above information is also available on the website of the Company q1-fy-23-earnings-transcript.pdfThanking you,For Tech Mahindra LimitedAnil KhatriCompany SecretaryEncl.: as above


Tech Mahindra LimitedJuly 25, 2022Page 2 of 17

Tech Mahindra LimitedJuly 25, 2022Moderator:Ladies and gentlemen, good day and welcome to the Tech Mahindra Limited Q1 FY'23 EarningsConference Call. As a reminder, all participant lines will be in the listen-only mode, and therewill be an opportunity for you to ask questions after the presentation concludes. Should you needassistance during the conference call, please signal an operator by pressing ‘*’ then ‘0’ on yourtouchtone phone. Please note that this conference is being recorded. I now turn the conferenceover to Mr. CP Gurnani, M.D. and CEO for Tech Mahindra. Thank you. And over to you sir.CP Gurnani:Good morning, good evening. Thank you for joining me on the Q1 FY'23 Analyst Earnings Call.Again, welcome and I do pray for your good health. Overall, as you know Tech Mahindra is acompany driven by purpose and is people-centric and performance-driven. On the purpose side,Tech Mahindra continues to be recognized for their focus on ESG and focus on sustainability.We have been rewarded, awarded, and more or less continue to set the benchmarks andsustainability.On the people-centric side, our Chief People Officer is one of the proud recipients of the GoldenPeacock for HR Excellence.We have also been recognized as the Most Preferred Workplace at the India Today Summit I'm just briefly covering what has happened during the quarter. And we have also improved thegender diversity from 34.1% to 34.4%.In terms of performance, I would like to reiterate that the big bold steps that we took indeveloping some of the capabilities 5G, Metaverse, the Makers Lab, that we set up at eightdifferent locations, continuing to invest in data and AI labs, continuing to invest in sports techvertical with platforms like Fan Nxt.Now, new platforms like I think is all comingtogether and we are able to deliver sustainable growth and we are able to create value for ourcustomers and partners. I know Rohit will cover the performance results in greater detail.On the growth side, we are now in constant currency at 1,632 million. Comms has grown 3.9%and Enterprise has grown at 3.2% in constant currency.I also have an honor of welcoming two new verticals into billion plus clubs I mean, commshas been there for a very long time. But the new 1 billion club now has BFSI and Manufacturingfor Tech Mahindra. The company continues to be driven by new age technologies, digitaltransformation, and more importantly, business transformation.Our EBIT margins have been a little bit under pressure. But as a company, we are determined toreverse the trend. And what I've committed to my board is this is the lowest we have gone or wewill go and we will be working together with my transformation office and my leadership tolook at many operating levers particularly on utilization, particularly on efficiency andproductivity and the pricing levers.Page 3 of 17

Tech Mahindra LimitedJuly 25, 2022So, again, Rohit will cover this, but I just want all of us to recognize that building technology atscale, building two-tire cities, delivery centers and preparing for the future. Yes, the reportedEBITDA margins have been lesser than what we had originally probably projected.In terms of our pipelines, I think both the sectors are showing very healthy pipelines. We trackour pipeline for existing accounts, new accounts, we look at digital transformation, we look atthe business transformation, we also very actively monitor our deal conversions. As I hadindicated earlier also that the focus is to deliver between 700 million to a billion dollars of dealconversions every quarter. This quarter also, we would be sharing with you that we booked about 800 million.So, clearly, firing on all cylinders. I know that two internal focus areas, number one is organicgrowth and number two is to bring back profitability on the track. I'm confident that these twofocus areas coupled with an industry-leading growth, I think you would find us much betteraligned and much better prepared.In terms of the economic challenges, as of date, we see the deal flows to be strong. We do analyzeevery account, every sector about the potential. So we have a dedicated task force, which is notonly looking at geographies, but also looking at the various verticals, and what our responsewould be. So I can only say that as of date, while there may not be a general consensus on whenthe economic headwinds will start pinching us, but overall, I think, we are in good shape for thenext few quarters.So that's really the opening commentary. For all those people who are chess lovers, I can onlysay that Tech Mahindra is very proud that we have been chosen by the International ChessFederation to be the Digital Partner for its 44th FIDE Chess Olympics, and is the first time takingplace in India. It starts on 28th in Chennai. Those who would like to join us. And on the ringsideof the Chess Olympiad, you're welcome.So, again, thank you for your support and thank you for your confidence. I'm handing over thecall to Rohit to get an Update on Financials.Rohit Anand:Thank you, CP. Good evening, everyone. Let me now cover the company financials for Q1ending June 2022. We ended the first quarter with revenue of 1,632 million versus 1608million last quarter, up 3.5% QoQ in constant currency. Growth was broad-based as CPmentioned with CME growing 3.9%, Enterprise growing 3.2% both in constant currency terms.We had another quarter of strong deal wins with a TCV at 802 million. Revenue in INR termswas 12,708 crores versus 12,116 crores in Q4, up 4.9% quarter-over quarter.The EBIT for the quarter was at 177 million, in INR terms 1,403 crores versus 211 million inQ4. EBIT margin for the quarter was at 11%, which is a reduction of 220 basis points QoQ dueto higher salaries, subcon related costs and some large deal transition costs that we saw. AnotherPage 4 of 17

Tech Mahindra LimitedJuly 25, 2022reason for deduction was revenue and visa seasonality that we see. And then normalization ofG&A and sales cost was another reason of margin reduction, offset in partially by pricing benefitthat we saw.Moving below EBIT, other income for the quarter was at 16 million versus 42 million in Q4.Forex gain was at 7 million compared to 28 million in Q4 2022. The tax rate for the quarterwas at 22.8%, which is higher compared to 17.5% in Q4. This is because we had higher reversalsof tax provision related to SEZ benefit in Q4 and partially also in Q1. A normalized rate is in therange of 26% to 27%.The net profit margin for the quarter is at 8.9%. Our free cash flow for Q1 FY'23 was at 72million. Our DSO have increased by three days to 100 from 97 in Q4, partially impacted bycurrency because of debtor revaluation.As mentioned earlier, we will continue to consistently follow a rule based hedging policy. As ofJune 2022, the total hedge book was 2.28 billion versus 2.22 billion in Q4 '22. Based on hedgeaccounting treatment, the net mark-to-market gain as of 30th, June was 68 million, out of which 11 million was taken to P&L and 57 million has gone to reserves. We had a cash and cashequivalent of 1.114 million, in rupees terms Rs.8,801 crores.Overall, the demand momentum as CP mentioned continues driving growth while the supplyside pressures are impacting profitability. But we've committed towards improving profitabilitywith targeted actions that should help us tide over the short-term pressure.With these remarks, I now open the floor to questions. Thank you.Moderator:We will now begin the question-and-answer session. The first question is from the line of RaviMenon from Macquarie. Please go ahead.Ravi Menon:Rohit, just wanted to check if there is any one-off in the SG&A like a bad debt provision orsomething like that. It seems to be up very sharply quarter-on-quarter.Rohit Anand:Last quarter, we did have some gain, which was one-time. I understand we've had increase inprovision, because of which the quarter-over-quarter variations looking large.Ravi Menon:Can you quantify the provisions in this quarter?Rohit Anand:We had a provision range of around 6 million.Ravi Menon:Would be great if you could share your vertical break up quarter-on-quarter in constant currencygrowth because of the cross-currency moments being sharp this quarter, it's a bit difficult for usto figure out what's happened to the communications vertical for instance?Page 5 of 17

Tech Mahindra LimitedJuly 25, 2022Rohit Anand:From a growth perspective, that will go one-by-one on a constant currency sequential quarterly.As I mentioned, comms was 3.9%, when you look at manufacturing, that has grown 5.7%,technology has grown 6.4%, retail has grown 6.8%, HLS and others have grown 2%, and thenBFS has been mostly flat, while on the reported side, it's impacted most because of FX.Moderator:The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.Gaurav Rateria:Firstly, on the large clients, if you look at the top client performance on quarter-on-quarter basis,it looks like a bit of decline that could be an element of FX. But even if you strip out that it seemsquite weak. So anything going out there, especially in the top pipeline bucket?Rohit Anand:So mostly, FX that you see and then there are certain projects that for the quarter stopped andthe new projects going to start in the following quarter. So beyond that there's nothing, but ifyou look at the trend broader, I think we've expanded beyond that outside the top-20, the growthhas been substantial. So that's a good sign and that's where we've had historically certain dealwins also that are ramping up. So the base in the top customers also spreading out.Gaurav Rateria:Could you just talk about the percentage on margins? I guess there would be some impact ofwage hikes which may come in the coming quarters. So what would be some of the headwindsand what would be the tailwinds, what gives you confidence that this is for the margin and goback to the range you had historically talked about?Rohit Anand:So from a Q2 perspective, headwinds predominantly is only one which you mentioned, whichis going to be the wage hikes, right. From a tailwind perspective, we've had certain goodoutcomes from pricing. I think that we have a good funnel and visibility. So that will continuegiving us some tailwind in Q2. We also will have lesser impact due to the visa and mobilitybusiness impact that we saw from Q4 to Q1, so that will ease out a little bit, so that will give usa favorability. Other big area which CP also reiterated that we will all focus on operationalefficiency. There we put plans to get our utilization backup. So if you remember, we spoken acouple of quarters back that we are consciously investing in the talent pool, investing in bottomof the pyramid. That utilization trend, we have concrete plans to get up by delivery unit bygeography in the current quarter, which will give us a positive tailwind as you look forward.Another big focus for us, we have almost 8% to 10% gap on our offshoring revenues versus peerset. And there also we have a clear by delivery unit and geo actions to drive offshoring in thecurrent quarter, and as well, these factors will continue through the year. So talking about Q2and then some of this will continue through the year. So those are the big actions that we're goingto drive from a tailwind perspective. And this quarter, we did have some large deal transitioncosts, which I mentioned, those won't be repeated. So as we see that, that will also give us abenefit in Q2.Page 6 of 17

Tech Mahindra LimitedJuly 25, 2022Gaurav Rateria:Lastly, on the cash flow, the conversion of PAT to free cash flow for last two consecutivequarters has been weaker than your usual trend. So what are the factors that have driven that andhow long will it take to come back to the historical trend that you used to deliver?Rohit Anand:I think this time a bit of the play was also driven by FX, but irrespective I think operatingperformance will get better as we look at Q2, Q3. So between the next two quarters, I think wewill get to a similar FCF conversion rate that we've seen in the past closer to the range of 90%110%Moderator:The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.Dipesh Mehta:Two questions. First, can you help us with the margin in Q1, I think you indicated some of thefactors. if you can break up us the contribution of those factors? Second question is about themargin projection. I think we are suggesting good confidence about margin recovery. Butconsidering let's say sometime you used to indicate 14%, 15% percentage as EBIT margin is agood range considering overall business mix and then future potentially maybe we can increaseit to further over medium to long term. So by when do you expect it we can again back to ouroptimal range of margin projection?Rohit Anand:Specifically for current quarter walk versus last quarter, as I mentioned, we saw approximatelya 50 bps expansion due to pricing actions and we've been talking about it for the last previousand the previous quarter that we're working at it, so that's giving us positive outcomes. We'veseen salary, subcon and large deals. Those three combined contribute a headwind ofapproximately 100 bps in the current quarter versus last quarter. Visa seasonality and themobility business jointly contribute approximately 80 bps. So those were the three big factorson the direct side and then there is a percent impact on G&A normalization, we had some goodimpact in the last quarter which is getting normalized with some of the impact on provision alsothat we have, due to which we are at 1%, 100 bps negative impact versus last quarter on theG&A part. So those are the big drivers that lead to a 13.2% to 11% book. Then, second part ofyour question, I think, as we look forward, a lot of these actions that I articulated are in motion.We have a very detail micro plan that we're working on. And that gives us the confidence as wemove forward that every quarter sequentially given this as a bottom, we will increase marginanywhere between 100 to 150 basis points and by the end of the year, I think we'll be in therange of around 14% EBIT. I think I mentioned earlier 15%, but I know where we are right now,14% seems like a more for 4Q exit run rate rather than 15%.Moderator:The next question is from the line of Sandip Agarwal from Edelweiss. Please go ahead.Sandip Agarwal:CP, thanks for the update on the business side and also good exhibition on revenue part. CP,what are you seeing in the market today -- are you seeing increasing tiltness of the client towardsconservatism given the macro environment or you are seeing continued spend or the inclinationto spend money, what you're seeing in the market today, versus you were seeing six monthsPage 7 of 17

Tech Mahindra LimitedJuly 25, 2022earlier? So are you seeing any kind of change in the client perspective? mood or they have reallydone some action on that, like, they have taken some things longer time or delay, any kind ofrefrainment from the aggression by which they were spending earlier, are you seeing any kindof early signs of that?Rohit Anand:I want Manish and Jagdish to comment about comms and enterprise verticals and then I like toalso summarize at a corporate level how are we tracking in terms of what changes are we seeing.So, Manish, first, probably to you.Manish Vyas:Sure, Rohit, thank you. Sandip, thank you for that question. I think, clearly, there is a lothappening in the macro, geopolitical economic scenario, and hence the question is quite valid.There are clear discussions in the various customer environments about what is exactly in store.So that indeed is happening. Is that resulting in any specific macro level trend change in termsof the spend patterns? We haven't seen any evidence of that yet. There are one-off conversationthat happens, but that is very strictly limited to that particular company's own individualdecisions, which I think is nothing to do with the overall macro scenario. At this point, I thinklike CP mentioned right up front, the funnel is pretty robust. The decision cycles continue toremain exactly as they were six to seven months back. The areas where the discussions arehappening in the telecom, media space, continue to be in this space of what is called “HolisticDigital Transformation” from network modernization to driving more velocity on underlyingdigital platforms, whether it is cloud or data, or customer experience. I guess that continues tohappen. We haven't seen any net-net in short. Before I hand over to Jagdish, I would say at thispoint we haven't seen anything material to come back and report at this.Jagdish Mitra:Sandip, thanks. Thanks, Manish. The outlook I think for us hasn't changed. It's very positivefrom a deal win and the pipeline robustness perspective. I think we all have to recognize that inthe last couple of years, trend that has got started in terms of redefining or rather modernizingthe core of everyone's enterprises business . what I mean by enterprise is the organization'score platforms, and solving that problem that we don't see any let down. So the pipeline of whatwe've talked about approximately upwards, you heard 700, 800 million of TCVs, we see asimilar trajectory in every growth. I personally drive the large deals across as a company andtherefore that large deal momentum I still see to continue. So from a deal win perspective, I don'tthink there is any let down. Industry wise, all of them, as Manish said, are focused on digitaltransformation. So supply chain issues and we called out four key areas, right -- cloud,connectivity, engineering and experience -- and all those four key areas, we think that even ifthere is an economic slowdown, the investment on those areas is something that the companiesand enterprises will have to do if they have to be relevant. And so therefore, that part, we feelvery confident about. I hope that answers your question, Sandip.Moderator:The next question is from the line of the Sandeep Shah from Equirus Securities. Please go ahead.Page 8 of 17

Tech Mahindra LimitedJuly 25, 2022Sandeep Shah:This question is to Manish Vyas. Just looking at the macro hiccups which have been increasing,what we are are reading is on the 5G CAPEX, clients are maybe becoming slightly cautious,they are accelerating where they can find the paying consumers, but where they are not findingthe paying consumers, they may become slightly more conservative. So whether this trend canlead to any negative surprise in a telecom growth recovery, which we have seen for almost fourto five quarters, do you foresee any downside risks to the growth momentum in telecom goingforward?Manish Vyas:Sandeep, again, thank you. See, it's like this, the 5G spend in the markets that we are spendingwas not necessarily a function of added consumer revenue. The focus on 5G was always tocontinue to build the new modern network in terms of replacing what is called the career adds,the capacity bill. So instead of building the career add on 4G, it was happening on 5g and thattrend will continue. Revenue uptick for the telcom was always going to be more aroundenterprises, not as much about the consumer business, I mean, that's a normal cycle that willcontinue. So that's not really necessarily a driver if anything changing. As far as the sectoralperformance is concerned, I'm assuming you're referring to our performance versus the industrybroad-based performance. I don't think like I said earlier, that whatever is happening at a macrolevel is giving us any indication of slowdown in the kind of opportunities that we are engagedin, in driving transformation at a process, at an operate, at a system, and at a business designlevel, or customer experience level, and for that matter of the network level. We're not seeingany change to the pattern of the kind of funnel that we're building.Sandeep Shah:Just a follow up to CP's opening remarks, where he said that we are confident for the growth inthe coming few quarters, while some of your large peers are indicating macro may startimpacting the second half of the growth, while I'm expecting that Tech Mahindra is alluding thateven the second half of this year may see healthy growth. So what is driving this confidence asa whole?Rohit Anand:I think a few things. One is we are continuously monitoring the pipeline and the pipeline islooking pretty strong, maybe better than what we've seen in the past. Now, the questions of dealconversion. So the trend continues what we've seen in the last few quarters of the range whereinthat continues over the next couple of quarters. I think we should be in that zone of continueddemand environment, right, which is what we are seeing right now. Of course, it's very dynamicworld. So hence, we are monitoring the situation through constant data as well as clientinteractions and put that feedback back into the way we have been looking at the next half. Sothat's kind of where we're doing it, but I think qualitatively as Manish, Jagdish mentioned, froma client communication discussion perspective, there's not some significant change as they moveinto the second half that we've seen, and that's why that's reflecting in our data and that's theview we right now have. I will also like Vivek to add his view on BFSI that he's seeing on HLSfrom a discussion with his clients that he can share with you.Page 9 of 17

Tech Mahindra LimitedJuly 25, 2022Vivek Agarwal:Thanks, Rohit. So not to repeat what Manish, Jagdish and Rohit have said, but just reiterate thatwe haven't seen any budget reductions. I think what gives us a degree of confidence is thepipeline. I think we've had a continuous win of large deals. So I think we have a backlog toexecute on. I think that does put us on a reasonably good footing as we look forward for the restof this year. And lastly, I think not only from the big ticket macroeconomic indicators, whichhas everybody confused, I don't think anybody has an answer. But what we are focused on ismore specifically looking at different industries, sub-verticals, and the impact they may haveand then obviously, at the next level, which are our specific clients have any specific impactsthey would have. And what we have is a fairly laid out thought process on how we will react ifwe were to see any early signs.Sandeep Shah:Just on the margins, Rohit, in terms of your comment, how much dependence are we placing interms of pricing as a tailwind in terms of your commentary of targeting 100-150 bps QoQincrease in the next three quarters? And just a follow up on the wage hikes, so what percentageof employees been covered in the first quarter, is it effective April, and what percentage ispending and how the balance wage hikes are scheduled?Rohit Anand:Maybe I will just take about pricing first. So we've sequentially quarter-over-quarter seenincrease in the quantum of price increase we've got. This time the impact as I mentioned was 50bps. What we look at next quarter is similar or better outcome of that. But outside of that in thesecond half right now, while we will continue to drive it, I think the view is, mostly first halffactor is an upside for us. We've not baked in significant upside in the second half, right. That'spretty much on the pricing side. In terms of wage hikes, it's all from a company perspective.While we do constant interventions to the year because it's not the same world as it was a fewyears back, there's usually a lot of retention and niche skills interventions happen through theyear. But from an annual cycle perspective, that for us will be effective in Q2 and broadly theimpact there's going to be around 100 bps.Sandeep Shah:And after 2Q all 100% of the employees will be covered on an annual wage hike?Rohit Anand:Yes, that's right.Moderator:The next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.Ashwin Mehta:Rohit, just one clarification in terms of what you said 100-150 bps improvement starts from 2Qor it's more in the second half of the year?Rohit Anand:It starts from 2Q and it continues 3Q, 4Q, that's how our actions are stacked. As I mentioned,right, from Q1 to Q2 perspective, some of the impacts that we've seen negative will getnormalized as we move forward, for example, a) Comviva and visa spend that seasonality impactwill lower down. Beyond that, the large deal one-off transition cost that I mentioned, that willnot get repeated. So that will kind of offset a little bit of the wage pressure that we see. AndPage 10 of 17

Tech Mahindra LimitedJuly 25, 2022outside of that the operating actions on utilization increasing from 82%, 83% range we'recomfortable with which is 87%, 88% through the year, some of that benefit will come in Q2.Similarly, offshoring, we have specific targets by months that we will be driving as we moveforward, will give us that range in each quarter as we move forward.Ashwin Mehta:Rohit, in terms of subcontracting because that saw a further increase in excess of 16%, what isthe outlook there, are we looking at that also being a lever as you go through the year?Rohit Anand:It is a lever. While we are pushing that, but that is also a little bit of a cost that is in terms ofstickiness available for us to act easier if we see a demand slowdown in the second half if thatscenario comes right, what you've been hearing from others, while we don't see it, but there's somuch of confusion what people are saying what the outcomes are reflecting. So when you lookat us entering the second half, this is a relatively easier bucket for us to act on, right, and reduceas we move forward. So as we look at it right now, if it's a subcon reduction initiative, where weget some benefit to that, and optimization, we're looking at one-to-one replacement, from aheadcount perspective more as we move forward for the second half rather than immediateactions.Moderator:The next question is from the line of Viraj from SiMPL. Please go ahead.Viraj:I just have one question. I don't know if Mr. Gurnani is still on the call. This is regarding theinvestment approach in terms of acquisitions and investments, which we have been making forlast several years, in '22, we made a significant amount of investment. And if I were to look atthe impairment part, we took something like 460-odd crores of impairment and cumulatively,last four years alone, it's in excess of 1,100, 1,200 crores. So just trying to understand how shouldone really understand the benefits of the acquisitions or the investments we've been making,because the amount on the impairment is also quite sizable. So just want to understand, if youcan provide some perspective.Rohit Anand:Viraj, maybe I just add a few sentences and then Vivek, who heads our corporate businessdevelopment function will add on. So a couple of things. One is, from an impairment perspective,we are going to look at it a consolidated level what's the impact versus standalone. The numbersyou are looking are more in subsidiaries in standalone numbers. The way it happens is, if we getan acquisition asset, the idea for us and the approach from an M&A perspective is, if changedversus what we had four to five years back, now we are integrating the companies and theofferings solution into our core business. So hence when we look at any acquired company, theway we look at it is more of a measurement unit across legal entities. So hence the business thathappens to that offering shows in that stream, which is not reflected in the legal entity. Hence,at a legal entity level, you might see an impairment, but at consolidated level, that's not the case,right. So that's kind of broadly the way it is and that's, why not to correlate that to the M&Aexecution strategy. We continuously through regular discussions with folks like you articulateour change in strategy, how they're performing and we'll continue to do that as we move forwardPage 11 of 17

Tech Mahindra LimitedJuly 25, 2022to show more and more transparency around our numbers on acquisition performance. But I willwant Vivek to add on some of the points around this.Vivek Agarwal:Yes, thanks, Rohit. So I think just from M&A approach, both from our tran

page 1 of 17 "tech mahindra limited's q1 fy'23 earnings conference call" july 25, 2022 management: mr.cp gurnani - managing director & chief executive officer mr.rohit anand -chief financial officer mr.jagdish mitra - chief strategy officer mr.harshvendra soin - chief people officer ms.simmi dhamija- chief transformation officer mr.manish vyas - president cme business