HCLTech, India’s third-largest IT services company, outperformed its larger and smaller rival TCS and Wipro on revenues and profit growth in the March quarter. It however missed Street estimates, trailing its annual guidance and also trimming its full-year revenue growth outlook.
The HCLTech management attributed the subdued quarterly performance to macro-uncertainties clouding the tech investment landscape and said AI-led automation could impact FY27/annual revenues by 2-4% though the company is seeking to offset it through more projects.
On Tuesday, HCLTech posted a 10% sequential growth in net profit at Rs. 4,488 crore in the fourth quarter of FY26. Profit grew 4.2% year-on-year.
To be sure, the company incurred a one-time impact of labour code charges in the December quarter. Excluding it, net profit stood at Rs 4,795 crore for Q3, translating into a 6.4% profit decline in Q4.
HCLTech’s board also declared an interim dividend of Rs 24 per share.
The Noida-headquartered company posted a 12% growth in revenue for the January-March period at Rs. 33,981 crore, although it grew a modest 0.3% sequentially, as geopolitical uncertainty impacted deal procurements.
In dollar terms, the company recorded revenue of $3,682 million in Q4, down 2.9% QoQ and up 5.3% YoY.
The company missed market estimates for both profit and revenue. ET’s poll had expected net profit at Rs. 4,695 crore, and revenue at Rs. 34,495 crore.
Impacted by a 35% sequential drop in deal bookings at $1.93 billion, HCLTech cut its overall FY27 revenue growth outlook to 1%-4%, with services revenue guidance between 1.5%-4.5%.
“The business environment remains highly fluid, making it difficult to form a definitive view of how the next 12 months will unfold,” said C Vijayakumar, CEO.
“North America continues to show relative resilience, with no broad-based macroeconomic challenges at this stage,” he said. “While our business fundamentals remain strong, we do have two client-specific challenges in the Americas that will create a headwind of approximately 50 basis points to growth in FY27.”
For FY26, revenue grew 3.9% in constant currency terms at $14.64 billion, missing its guidance of 4%-4.5%. Net profit for the year fell to $1.95 billion, from $2.04 billion in FY25.
“We did see significant delays in the procurement decisions in March, especially,” said Vijayakumar. “And we also saw discretionaries being reduced by two US telecom firms, which impacted us in the last quarter, and that is likely to play out during the rest of the financial calendar year.”
The company reported standalone AI revenue of $155 million, up 6.1% sequentially in constant currency terms. Annualised AI revenue stood at $620 million.
HCLTech’s biggest rival TCS kicked off the earnings season earlier this month with a 2.4% drop in annual revenue, while Wipro recorded a 1.6% decline, with AI-led disruptions and geopolitical uncertainties reflecting in their operations.
“HCLTech FY26 results are good relative to the industry peers,” said Pareekh Jain, CEO at IT research firm EIIR Trend. “The USD YoY growth in revenue is good when TCS YoY USD growth is negative. Engineering services are a big contributor to this growth.”
Jain, however, underlined that the decline in deal bookings and conservative revenue guidance remains disappointing.
Headcount
HCLTech boosted its headcount by 802 employees in the March quarter, against a net reduction of 261 employees in the December quarter. During the three months, HCLTech also added 1,712 freshers, taking its overall employee base to 227,181.
Operating margins and verticals
All core markets posted positive growth, except Europe, with America leading the revenue share at 57.4% and growing 4.9%. The rest of the world market grew the strongest at 16.6% but constituted just about 12.1% of the company’s business.
The Europe region, however, declined by 2.9% on-year basis and constituted 27.5% of HCLTech’s revenue, impacted by second-order effects of the geopolitical uncertainties, causing a rise in energy prices and supply chain disruptions.
Among the verticals, technology and services grew the strongest at 17.8% on-year, forming 13.4% of total revenue at March-end. All core verticals posted growth, except telecommunications and media which were down 8.6%.
The IT services led year-on-year growth in constant currency terms, up 4.3%, while the engineering R&D business grew 3.8%. The software segment, however, declined by 14.1% in what is a seasonally weak quarter for the segment.
HCLTech’s operating margin sharply moderated to 16.5% in the fiscal fourth quarter, from the previous quarter’s 18.6% and 17.9% a year ago.
Amid margin pressures, the company maintained its margin outlook at 17.5-18.6%.
The HCLTech management attributed the subdued quarterly performance to macro-uncertainties clouding the tech investment landscape and said AI-led automation could impact FY27/annual revenues by 2-4% though the company is seeking to offset it through more projects.
On Tuesday, HCLTech posted a 10% sequential growth in net profit at Rs. 4,488 crore in the fourth quarter of FY26. Profit grew 4.2% year-on-year.
To be sure, the company incurred a one-time impact of labour code charges in the December quarter. Excluding it, net profit stood at Rs 4,795 crore for Q3, translating into a 6.4% profit decline in Q4.
HCLTech’s board also declared an interim dividend of Rs 24 per share.
The Noida-headquartered company posted a 12% growth in revenue for the January-March period at Rs. 33,981 crore, although it grew a modest 0.3% sequentially, as geopolitical uncertainty impacted deal procurements.
In dollar terms, the company recorded revenue of $3,682 million in Q4, down 2.9% QoQ and up 5.3% YoY.
The company missed market estimates for both profit and revenue. ET’s poll had expected net profit at Rs. 4,695 crore, and revenue at Rs. 34,495 crore.
Impacted by a 35% sequential drop in deal bookings at $1.93 billion, HCLTech cut its overall FY27 revenue growth outlook to 1%-4%, with services revenue guidance between 1.5%-4.5%.
“The business environment remains highly fluid, making it difficult to form a definitive view of how the next 12 months will unfold,” said C Vijayakumar, CEO.
“North America continues to show relative resilience, with no broad-based macroeconomic challenges at this stage,” he said. “While our business fundamentals remain strong, we do have two client-specific challenges in the Americas that will create a headwind of approximately 50 basis points to growth in FY27.”
For FY26, revenue grew 3.9% in constant currency terms at $14.64 billion, missing its guidance of 4%-4.5%. Net profit for the year fell to $1.95 billion, from $2.04 billion in FY25.
“We did see significant delays in the procurement decisions in March, especially,” said Vijayakumar. “And we also saw discretionaries being reduced by two US telecom firms, which impacted us in the last quarter, and that is likely to play out during the rest of the financial calendar year.”
The company reported standalone AI revenue of $155 million, up 6.1% sequentially in constant currency terms. Annualised AI revenue stood at $620 million.
HCLTech’s biggest rival TCS kicked off the earnings season earlier this month with a 2.4% drop in annual revenue, while Wipro recorded a 1.6% decline, with AI-led disruptions and geopolitical uncertainties reflecting in their operations.
“HCLTech FY26 results are good relative to the industry peers,” said Pareekh Jain, CEO at IT research firm EIIR Trend. “The USD YoY growth in revenue is good when TCS YoY USD growth is negative. Engineering services are a big contributor to this growth.”
Jain, however, underlined that the decline in deal bookings and conservative revenue guidance remains disappointing.
Headcount
HCLTech boosted its headcount by 802 employees in the March quarter, against a net reduction of 261 employees in the December quarter. During the three months, HCLTech also added 1,712 freshers, taking its overall employee base to 227,181.
Operating margins and verticals
All core markets posted positive growth, except Europe, with America leading the revenue share at 57.4% and growing 4.9%. The rest of the world market grew the strongest at 16.6% but constituted just about 12.1% of the company’s business.
The Europe region, however, declined by 2.9% on-year basis and constituted 27.5% of HCLTech’s revenue, impacted by second-order effects of the geopolitical uncertainties, causing a rise in energy prices and supply chain disruptions.
Among the verticals, technology and services grew the strongest at 17.8% on-year, forming 13.4% of total revenue at March-end. All core verticals posted growth, except telecommunications and media which were down 8.6%.
The IT services led year-on-year growth in constant currency terms, up 4.3%, while the engineering R&D business grew 3.8%. The software segment, however, declined by 14.1% in what is a seasonally weak quarter for the segment.
HCLTech’s operating margin sharply moderated to 16.5% in the fiscal fourth quarter, from the previous quarter’s 18.6% and 17.9% a year ago.
Amid margin pressures, the company maintained its margin outlook at 17.5-18.6%.