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HCLTech sees rating downgrade post Q1 results, guidance disappointment
Guidance indicates that margins will remain subdued in Q2FY26, as some restructuring cost will spill over
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HCLTech expects utilisation to normalise by Q3FY26 and margins to improve in the second half of FY26.
The April-June quarter (Q1FY26) results and guidance of HCL Technologies (HCLTech) have resulted in disappointment.
HCLTech reported a revenue decline of 0.8 per cent quarter-on-quarter (Q-o-Q) in constant currency (CC) terms.
But margins were lower than expectations, impacted by lower utilisation, GenAI investments, and client bankruptcy.
Guidance indicates that margins will remain subdued in Q2FY26, as some restructuring cost will spill over.
The FY26 earnings before interest and taxes (Ebit) margin guidance was lowered to 17-18 per cent (earlier 18-19 per cent). This was to account for margin pressure, upfront investments in GenAI, and planned restructuring expenses with an estimated
