HCLTech Q3 results: Profit falls 11% to ₹4,076 cr on labour code impact

Q3 top line beats Street estimates, bottom line misses expectations

HCLTech, India’s third-largest information technology (IT) services provider, reported an 11.1 per cent drop in third-quarter (October-December/Q3) profit, hit by a one-time impact from the new labour codes implemented by the government in November. For the quarter ended December 31, 2025, the company posted a net profit of ₹4,076 crore.

 

Its revenue for Q3 of 2025-26 (FY26) rose 13.3 per cent year-on-year to ₹33,872 crore, driven by the financial services and manufacturing verticals, which grew 8.1 per cent and 1.8 per cent, respectively, on a constant currency basis. Sequentially, the firm’s revenue grew 6 per cent.

 

The revenue figures beat Bloomberg estimates, but profit missed Street expectations.

 

 

A focus on new areas and a healthy order book led it to revise its guidance once again for the year. At the company level, it now expects constant-currency growth of 4–4.5 per cent, up from 3–5 per cent projected three months ago. Services revenue is expected to grow faster, between 4.75 per cent and 5.25 per cent, up from the earlier 4–5 per cent forecast.

 

C Vijayakumar, chief executive officer and managing director, said discretionary spending patterns remained similar to the second quarter (July-September/Q2) as uncertainties persisted.

 

“It is still a little soft in the traditional spending areas, but we are no longer waiting or expecting it to return to levels seen a few years ago. Instead, we are focusing our energy where the spend is happening, such as data centres, robotics, physical artificial intelligence (AI), semiconductors, and edge inferencing, which are the foundational blocks of AI,” he added.

 

The company’s provision for employee benefits under the labour codes was ₹956 crore during the three months ended December. “Under Ind AS 19, changes to employee benefit plans arising from legislative amendments constitute a plan amendment, requiring recognition of past service cost immediately in the statement of profit and loss,” the company said on Monday.

 

Larger rival Tata Consultancy Services, which kicked off the earnings season for Indian IT firms, also accounted for the impact of the codes at ₹2,128 crore. Experts say the new labour codes mark a decisive reset for India’s IT and IT-enabled services sector, as for the first time, these companies will be governed by the central OSH (Occupational Safety, Health and Working Conditions) Code alongside state shop-and-establishment norms, introducing prescriptive rules on working hours, overtime, welfare, and statutory documentation.

 

For HCL, total contract value — or new deal wins — was $3 billion, up 43.5 per cent from a year ago.

 

Its advanced AI revenue stood at $148 million at the end of Q3, up 20 per cent sequentially. Advanced AI includes industry AI solutions, AI engineering, agentic AI, physical AI, AI factory, and proprietary AI intellectual property. It excludes classical AI, machine learning, and robotic process automation technologies.

 

It also added 2,852 freshers during the quarter, taking its total employee strength to 226,379 at the end of Q3FY26.