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Informist, Monday, Oct. 13, 2025

 

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--HCL Tech: Made huge investments in intellectual property over past few yrs 
--CONTEXT: HCL Tech management comments in post-earnings call with analysts 
--HCL Tech: Training more employees to support AI adoption 
--HCL Tech: Deal pipeline robust, supported by advanced AI 
--HCL Tech: External environment remains unpredictable 
--HCL Tech: Dependence on H-1B visas down to few hundred per annum 
--HCL Tech: Restructuring programme may continue in Q3, Q4 
--HCL Tech: Order pipeline for automobile vertical looks strong 
--HCL Tech: Decision making by clients in auto segment "not happening" fast 
--HCL Tech on H-1B visa fee hike: See little difference in wages 
--HCL Tech: Confident of growth trajectory for rest of year 

By Anjana Therese Antony and Sunil Raghu

 

MUMBAI/AHMEDABAD – Amid the overall slowdown in the automobile industry, HCL Technologies Ltd. Monday said decision making by

its clients from the sector is "just not happening" even though the order pipeline looks strong. "...given the stress in the industry (auto), it's only a matter of time when we see some large outsourcing possibilities. But we have to wait it out," the management said in a conference call with analysts post-earnings announcement.

 

The Noida-based company's automobile clients are categorised under its manufacturing business, which accounted for over 18% of the overall revenue in the September quarter. The revenue from its manufacturing operations fell almost 2% on year in constant currency terms during the quarter, among the only two verticals which reported a decline in the metric. The information technology company's consolidated revenue for the quarter was INR 319.42 billion and the net profit was INR 42.35 billion. Sequentially, the top line and bottom line grew 5% and 10%, respectively. The company said it is confident about the overall growth trajectory for the rest of the year. 

 

The management also said its overall deal pipeline remains robust and has grown to a record high, supported by its advanced artificial intelligence propositions. In the September quarter, HCL Technologies bagged new deals worth $2.57 billion, up almost 42% on quarter and nearly 16% on year even though it did not win mega deals.

 

Speaking about the restructuring programme to restore its 18-19% margin, the company said this will continue through the December quarter and is expected to have some "spillover" in the following quarter as well. The wage revision cycle will kick in during the December quarter, it said. When it detailed the June quarter earnings, HCL Technologies had announced a restructuring programme that included optimisation of its facilities outside India and a "talent ramp-down," especially in foreign geographies.

 

The company's consolidated earnings before interest and tax margin for the September quarter was 17.5%, up 120 basis points from a quarter ago. "Q3 (Oct-Dec) is expected to have 70 to 80 basis point impact and Q4 (Jan-Mar) to have an incremental impact of 40 to 50 basis point," the management said, adding that the impact is factored in its margin guidance. HCL Technologies has retained its 17-18?IT margin guidance for 2025-26 (Apr-Mar), in line with the Street's expectation.  

 

The management said the restructuring programme had a negative impact of 55 bps in the latest quarter, but foreign exchange gains from the rupee's depreciation had a positive impact of 56 bps. The IT player expects the impact of its restructuring programme to be "only slightly on the higher side for the full year" based on the visibility the company currently has.

 

EXTERNAL ENVIRONMENT

Even though the overall demand in Jul-Sept was largely similar to a quarter ago, the company said the external environment remains unpredictable due to uncertainty about US policies on trade, tariffs, and visas. However, its key business indicators such as revenue growth, order bookings and pipeline, and demand for AI projects "all look promising".

 

The company said it has reduced the dependence on H-1B visas to a few hundred per annum. This is sharply lower than the 5,500 H-1B approvals its industry peer Tata Consultancy Services Ltd. got till June. "Fortunately, the dependence is very low (on H-1B), so that way we feel comfortable."  

 

In September, the US hiked the H-1B visa fee for new applications to $100,000, raising concerns for Indian IT companies which deploy some of their employees in the US under this visa. From a wage perspective, the company said this will have more or less very little impact, but "we'll have to see how we'll manage it".

 

ARTIFICIAL INTELLIGENCE

HCL Technologies said it has made significant investments in intellectual property over the last few years. The company generated over $100 million in revenue from advanced AI through its diverse service lines and intellectual property rights, which accounted for 3% of its overall top line in the September quarter. HCL Technologies' intellectual property portfolio includes a range of software products, platforms, and proprietary frameworks focusing on cloud, AI, and fifth generation networks.

 

The company also said there are a couple of small products under its HCLSoftware business which are sold as intellectual property. "Right now the IP component is small," the management said. It is also looking to build more intellectual property and monetise them. The IT giant is looking to invest more in advanced AI propositions, intellectual property, and partnerships to help its enterprise clients "realise value out of their AI investment". HCL Technologies is training more employees to support the demand for AI enterprise adoption.

 

India's third-largest IT company in terms of market capitalisation announced its quarterly results after market hours. On Monday, its shares closed almost flat at INR 1,494.70 on the National Stock Exchange.  End

 

US$1 = INR 88.67

 

Edited by Ashish Shirke

 

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