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Informist, Friday, Jul. 10, 2026

 

By Shakshi Jain

 

NEW DELHI – Information technology services major HCL Technologies Ltd. is expected to report a flat net profit for the June quarter and a marginal sequential rise in revenue, helped by depreciation of the rupee against the dollar. Analysts expect the company's constant currency revenue to decline on a sequential basis due to seasonal weakness in the services business and ramp-downs in select large deals. The decline in revenue is expected to be limited by the products business, which is likely to have held steady or grown suitably in the reporting quarter, according to brokerages.

 

If analysts' consensus estimates hold, the company's bottom line will see a paltry decline after a double-digit sequential growth in the March quarter. The top line will grow for the eighth consecutive quarter at a stronger pace compared to the trailing quarter.

 

HCL Tech's consolidated net profit for the June quarter is expected to stay largely unchanged on a sequential basis at INR 44.86 billion, according to an average of estimates from 13 brokerages. This would, however, mean a year-on-year growth of almost 17%. The highest net-profit estimate is INR 47 billion from Motilal Oswal Financial Services Ltd. and, the lowest is INR 41.87 billion from ICICI Securities Ltd.

 

Besides the anticipated decline in revenue, artificial intelligence-related investments of the company are expected to dent the bottom line. Last month, HCL Tech had said it would invest INR 14.27 billion in generative AI firm Axonwise Pvt. Ltd., which does business as Sarvam AI, by acquiring 10.5% stake in it. The stake acquisition was expected to be concluded by June-end.

 

On the flip side, a weaker rupee in the June quarter and sequentially lower employee restructuring costs are likely to provide some cushion to the bottom line, brokerages said. "Expect moderate restructuring charges though lower than 122 bps (basis points) of 4Q FY26 (Jan-Mar)," Kotak Securities Ltd. said in a note.

 

The Noida-based firm's consolidated revenue for the reporting quarter is expected to rise 1.3% sequentially and over 13% on year to INR 344.38 billion, according to the average of estimates. The highest top-line estimate is INR 351.84 billion from Axis Securities Ltd. and the lowest is INR 337.88 billion from Nirmal Bang Equities Pvt. Ltd.

 

"We expect BFSI (banking, financial services, and insurance) and hi-tech to remain relatively resilient, while telecom and manufacturing may continue to face client-specific weakness," brokerage Motilal Oswal said in an earnings preview. 

 

The anticipated growth in the company's top line for the quarter is solely on the back of depreciation of the rupee against the dollar. Although the domestic currency appreciated 0.2% against the dollar by the end of the reporting quarter, it had traded lower for most of the three months, touching an intraday low of INR 96.96 on May 20.

 

The June quarter is typically a weak one for HCL Tech as annual productivity pass-back for a large number of contracts kicks in during the quarter. Analysts expect the company's constant currency revenue to decline 0.5-1.5% sequentially for the reporting quarter, led by the seasonal decline in the services business and client-specific spending cuts.

 

For the March quarter, the large-cap company had reported a consolidated net profit of INR 44.88 billion on revenues of INR 339.81 billion. In the press conference following the March-quarter earnings announcement, the HCL Tech management had said the company saw select clients scaling back discretionary investments across digital business and engineering services during the quarter and some of that impact was likely to carry into the June quarter as well. The management had said HCL Tech's business fundamentals remained strong, but it was facing two client-specific challenges in the Americas market that could have a negative impact of approximately 50 bps on growth in the financial year 2026-27 (Apr-Mar).

 

In dollar terms, HCL Tech's revenue for the June quarter is expected to remain largely unchanged on a sequential basis at $3.64 billion, according to an average of estimates from 10 brokerages. Analysts estimate a negative cross-currency impact of 20-40 bps on this front for the reporting quarter. HCL Tech derives roughly 56% of its revenue from the US, almost 28% from Europe, a little over 3% from India, and about 13% from the "rest of the world".

 

Brokerages expect the IT services player to report deal wins in the $2 billion-$3 billion range for the reporting quarter. "We expect TCV (total contract value) to remain close to the lower end of the guided range of US$2-2.5bn (billion) for 1QFY27 (Apr-Jun) as there have been no mega deal signings during the quarter and 1Q is usually a weak quarter in terms of deal signings," Nirmal Bang Equities said.

 

MARGIN MOVEMENT, COMMENTARY

Analysts are divided on movement in the company's earnings before interest and tax margin for the June quarter. A majority leaned towards an expansion of the margin by up to 60 bps on the back of lower employee restructuring expenses, rupee depreciation, and Project Ascend-led operational efficiencies.

 

However, ICICI Securities Ltd., Axis Securities, Centrum Broking Ltd., Nirmal Bang, and Prabhudas Lilladher Pvt. Ltd. estimate a sequential earnings before interest and tax margin decline of 10 bps to 110 bps due to ramp-downs in two accounts, absence of operating leverage on revenue growth, restructuring costs, and AI-related investments. "There will be an impact of (about) 40bps from the restructuring expenses for FY27, which will be spread across quarters, and have been part of every quarter in FY26," Nirmal Bang Equities said.

 

HCL Tech aims to reinvest the benefits of currency depreciation into strengthening its AI capabilities and sales engine. The company spent 50 bps of its revenue into AI-led initiatives and go-to-market investments in FY26, and a similar spend is likely this year, according to Chief Executive Officer and Managing Director C. Vijayakumar. For context, Project Ascend is a medium- to long-term internal margin expansion and cost management initiative launched by HCL Tech in mid-2025.

 

As per an average of estimates from 11 brokerages, HCL Tech's EBIT margin is expected to expand 10 bps to 16.6% for the reporting quarter.

 

Most brokerages expect the company to retain its FY27 revenue growth guidance of 1-4% in constant currency terms and an EBIT margin of 17.5% to 18.5%. On the extreme ends, brokerage Motilal Oswal believes the company could trim the upper end of its sales growth guidance by 100 bps while Anand Rathi Share and Stock Brokers Ltd. expects the company to raise the guidance to 1.5-4.5% on the back of the recently-won $1.14 billion mega deal with a Fortune Global 50 firm for a five-year term. "The hurdle rate to achieve lower end and upper end of guidance stands at 0.7-2.7% from 2Q-4Q FY27E," Kotak Securities said.

 

In the conference call with analysts following the March quarter earnings disclosure, the company had said at the higher end of the guidance it expects to see a moderate pickup in discretionary spending and a couple of large deals materialising in Apr-Sept. "At the lower end, this (guidance) assumes a continued soft discretionary spend environment, and the two clients that I referenced ramp-down beyond the planned ramp-downs," Vijayakumar had said.

 

HCL Tech will announce its June quarter earnings Monday. Investors await the management's commentary on guidance revision, if any, on demand and deal pipeline, revenue mix, and growth from AI-amplified and AI-native services, and the pricing environment. Investors will also look for information on deal closures, integration and synergy benefits from recently acquired firms, execution of AI deals, and change in hiring strategy, if any.

 

Friday, shares of HCL Tech closed at INR 1,164.10 on the National Stock Exchange, up 1.2% from Thursday. The stock is down over 19% since the company reported its March quarter earnings. It is also down almost 35% from its 52-week high of INR 1,780.3, recorded on Feb. 3.

 

Of the 19 research reports on HCL Tech available with Informist, nine have a "buy" recommendation on the stock while six have a "hold" call and four say "sell". The average target price of the "buy" recommendations is INR 1,574 and that of the "hold" recommendations is INR 1,519. This is around 35% and 31% higher, respectively, than Friday's closing price.

 

Following are the Apr-Jun earnings estimates, in INR billion, for HCL Technologies from 13 brokerages, in descending order of net profit estimates:

 

Broking Firm	Net Sales	Net Profit	Revenue ($)	EBIT (%)
Motilal Oswal Financial Services Ltd.	343.00	47.00	3.62	16.9
Nuvama Wealth Management Ltd.	344.01	46.05	3.63	16.9
Elara Securities (India) Pvt. Ltd.	341.06	45.77	3.63	--
IDBI Capital Market Services Ltd.	345.92	45.66	3.66	16.8
Kotak Securities Ltd.	345.99	45.61	3.65	16.8
Axis Securities Ltd.	351.84	45.48	--	16.1
Emkay Global Financial Services Ltd.	345.50	45.31	--	--
Nomura Equity Research	342.92	45.22	3.65	16.5
JM Financial Institutional Securities Pvt. Ltd.	343.27	45.10	3.63	16.9
Prabhudas Lilladher Pvt. Ltd.	344.70	44.60	3.64	16.7
Centrum Broking Ltd.	345.13	43.01	--	16.2
Nirmal Bang Equities Pvt. Ltd.	337.88	42.55	3.67	16.4
ICICI Securities Ltd.	345.71	41.87	3.64	16.3
Average	344.38	44.86	3.64	16.6

 

End

 

US$1 = INR 95.32

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Himanshi Gupta

 

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