HCLTech Q1 results: Net profit slips 10% to ₹3,843 cr, revenue up 8.2%

Noida-based IT services exporter raises lower end of its guidance to 3-5% on constant-currency basis

HCLTech, India’s third-largest information-technology (IT) services firm, on Monday reported net profit for the first quarter of 2025-26 at ₹3,843 crore, down 9.72 per cent year-on-year. 

On a sequential basis profit was down 10.7 per cent. It reported 3.7 per cent constant-currency revenue growth for the April-June quarter, helped by its technology and services, telecommunications and media, and financial services. 

These more than offset the sluggishness in manufacturing and the life-sciences vertical. 

For the quarter ended June 30, HCL reported revenue of ₹30,349 crore, up 8.2 per cent over that in the same period a year earlier. 

The value of the new deal bookings stood at $1.81 billion. That also helped India’s third-largest IT services exporter to raise the lower end of its guidance. HCL now expects to grow 3-5 per cent on a constant-currency basis for the full year, up from 2-5 per cent it had projected in April. 

However, the firm cut its EBIT (earnings before interest and tax) margin guidance to 17-18 per cent from 18-19 per cent earlier. The company said the margins would be impacted due to restructuring. 

“The macro environment remained stable from an overall perspective, with some variations across verticals, but the overall situation did not deteriorate as feared at the start of the quarter,” said C Vijayakumar, chief executive officer (CEO) and managing director, at a news conference. 

“We won a large consolidation deal in financial services this quarter, which is not accounted for in the total contract value (TCV) for the first quarter,” Vijayakumar added. 

“We have some large deals in the pipeline which were expected to close in Q1 but have moved to the second quarter. This delay is unrelated to the external or macro factors. We are optimistic about this conversion, and if all goes according to plan, the TCV numbers should see a stepup in the coming quarters.” 

Financial services were up 6.8 per cent, technology 13.7 per cent, and telecommunications 13 per cent. The manufacturing and life sciences verticals were down 1 per cent and 4 per cent, respectively, because uncertainties persisted in those sectors owing to concerns over trade tariffs. 

While growth in the United States, the biggest market that contributes about 60 per cent to the top line, remained muted, Europe was up 9.6 per cent while business from other geographies, excluding India, was up 15 per cent. 

“Steady bookings, artificial intelligence/GenAI adoption, a robust pipeline and management commentary on non-deterioration of demand environment position it well for FY26. While near-term uncertainties may impact discretionary spending, HCLTech’s diversified portfolio and AI-driven solutions ensure long-term growth potential,” wrote Shaji Nair, research analyst, Mirae Asset Sharekhan. Operating margins, however, dropped to 16.3 per cent from 17.1 per cent year-on-year. 

“The margins were lower than what we had planned. While Q1 has been historically low for us, the margins were below expectations as utilisation dropped due to a delay in rampup of a specific programme. We also encountered rampdowns in specific areas. Also there was a demand supply mismatch between skills and locations and a client bankruptcy,” the CEO said.

The headcount dropped by 269 to stand at 223,151 at the end of June, while attrition remained flat sequentially at 12.8 per cent. 

The company took on board 1,984 fresh engineering graduates in the last three months. HCL will also add people with specialised skills in AI, cybersecurity, and digital engineering. They will account for 15-20 per cent of fresh hiring. 

“We will also be undertaking some restructuring in facilities which we are not utilising outside India which are related to acquisitions. Also there will be some talent ramp downs in some geographies outside India and expect during the second and third quarter and a small part in the last,” Vijayakumar added. 

Meanwhile, the first-quarter performance of India’s largest IT services provider, Tata Consultancy Services (TCS), continued to reflect the impact of macroeconomic uncertainty and slow discretionary spending. The firm’s management remained optimistic overall, but admitted that high single-digit growth looks tough. 

TCS reported a net profit of ₹12,760 crore for the first quarter of FY26, up 6 per cent compared to ₹12,040 crore in the same period of FY25. 

Revenue grew 1.3 per cent year-on-year (Y-o-Y) in reported terms to ₹63,437 crore in Q1FY26. Sequentially, the company’s revenue was down by 1.6 per cent, the slowest quarterly growth since Q1FY21, when revenue fell 4 per cent quarter-on-quarter due to the Covid-19 pandemic. Prior to that, TCS had reported a sequential revenue decline of 0.2 per cent in Q1FY18.