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Informist, Monday, Jul. 14, 2025

 

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--HCL Tech: Discretionary spend varied across verticals in Apr-Jun
--CONTEXT: HCL Tech management's comments at post-earnings analyst call
--HCL Tech: More than 35 clients using AI services
--HCL Tech: Raising FY26 revenue guidance on better outlook for future qtrs
--HCL Tech: FY26 EBIT margin guidance slightly lowered amid certain headwinds
--HCL Tech: Don't see quick recovery in automotive in manufacturing vertical
--HCL Tech: See verticals fare similar to Apr-Jun in rest of FY26

 

By Rajesh Gajra

 

NEW DELHI – HCL Technologies Ltd. has raised its 2025-26 (Apr-Mar) revenue growth guidance to 3-5% in constant currency terms, from 2-5% specified in April, based on its June quarter performance and its positive outlook on revenue growth for the remaining three quarters of the year, the management said Monday in a post-earnings conference call with analysts and investors. However, the company has lowered its earnings before interest and tax margin guidance for FY26 to 17-18% from 18-19% due to "certain headwinds", the management said.

 

The headwinds, according to the management, included the under-utilisation of expensive, highly-skilled manpower in the June quarter due to delays in client ramp-ups and mismatch between skills and location. This particular headwind is expected to spill over to the September quarter. A one-off client bankruptcy hit the company's margins in the June quarter. Significant investments in artificial intelligence services, which are expected to continue going forward and were baked into the guidance earlier, too, will have an impact on the margin, according to the management of HCL Technologies.

 

Discretionary spending by clients varied across verticals in the June quarter, according to the company. The management said the verticals will fare similarly to that in the June quarter in the remainder of FY26. The macroeconomic environment was surprisingly stable despite concerns at the start of the June quarter that US trade tariffs may lead to deterioration, the management said.

 

In the June quarter, HCL Technologies' revenues were dragged down by life sciences and healthcare, manufacturing, retail, and public services verticals, while technology and services, telecommunications, media and entertainment, and financial services verticals aided the top line of the company. The management said the revenue trend among verticals for the remaining three quarters of FY26 will be on similar lines.

 

The automotive sector slowdown leading to deal ramp-downs among automotive clients has been a drag on the company's manufacturing vertical performance in the past few years. The management said in the concall, it did not see any quick recovery of client demand on this front.

 

On the increasing use of AI services, the management said more than 35 of its large clients were using the company's AI offerings. It said the company was well positioned to take advantage of enterprise AI spends.

 

HCL Technologies' consolidated net profit fell 11% on quarter to INR 38.43 billion in the June quarter, while its consolidated revenue from operations recorded a small 0.3% sequential increase to INR 303.49 billion. The revenue in constant currency terms was, however, down 0.8% sequentially.  

 

Monday, shares of HCL Technologies closed 1.1% down at INR 1,619.80 on the National Stock Exchange. The company announced its June quarter earnings post market hours Monday.  End

 

Edited by Deepshikha Bhardwaj

 

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