HCL Technologies: Q1 Profit Dips 10%, AI Team Underutilization Impacts Margins

1 min read     Updated on 14 Jul 2025, 05:45 PM
scanxBy ScanX News Team
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Overview

HCL Technologies reported a 10% YoY decline in Q1 net profit to ₹3,843.00 crore, below market estimates. Revenue increased 8% to ₹30,349.00 crore. EBIT fell 9% QoQ to ₹4,942.00 crore, with margin decreasing to 16.35%. One-third of AI team underutilized, impacting margins. Board declared ₹12.00 per share interim dividend. Company projects 3-5% YoY revenue growth and 17-18% EBIT margin for the fiscal year. Plans to increase hiring for FY26.

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*this image is generated using AI for illustrative purposes only.

HCL Technologies Limited (HCL Tech), a leading global technology company, has announced its financial results for the first quarter, along with a dividend declaration and insights into its AI team utilization.

Financial Performance

HCL Tech reported a consolidated net profit of ₹3,843.00 crore for Q1, marking a 10% year-on-year decline. This figure fell below market estimates. However, the company's revenue from operations saw an 8% increase, reaching ₹30,349.00 crore, which was marginally above expectations.

Segment-wise Performance

The company's performance across its business segments for Q1 was as follows:

Segment Revenue (₹ crore) Segment Results (₹ crore)
IT and Business Services 22,454.00 3,393.00
Engineering and R&D Services 5,174.00 916.00
HCL Software 2,721.00 633.00

Profitability Metrics

The company's EBIT (Earnings Before Interest and Taxes) for Q1 stood at ₹4,942.00 crore, down 9% sequentially from ₹5,442.00 crore in the previous quarter. Consequently, the EBIT margin decreased to 16.35% from 17.99% in the last quarter.

AI Team Utilization Challenges

HCL Technologies reported that one-third of its AI-focused team is currently underutilized, resulting in an 80 bps impact on margins. The company expects these utilization challenges to moderate in Q2 and Q3, with a projected 10-20 bps full-year margin drag.

Dividend Announcement

HCL Tech's Board of Directors has declared an interim dividend of ₹12.00 per equity share. The record date for this dividend is set for July 18, with the payment scheduled for July 28.

Future Outlook

Looking ahead, HCL Tech has provided guidance for the fiscal year. The company projects revenue growth of 3-5% year-on-year in constant currency. Additionally, the EBIT margin is expected to be between 17-18%.

Hiring Plans

HCL Technologies plans to increase hiring for FY26, focusing on specialized roles and freshers to support its growth strategy and address the evolving needs of the technology sector.

Management Commentary

C. Vijayakumar, Chief Executive Officer and Managing Director of HCL Technologies, stated, "Our Q1 results reflect the ongoing global economic challenges, but we remain focused on delivering value to our clients through our comprehensive range of services and solutions."

Looking Ahead

While the company faces headwinds in the form of reduced profits and AI team underutilization, the increase in revenue suggests resilience in HCL Tech's business model. The company's diverse portfolio across IT services, Engineering R&D, and software products continues to provide a balanced approach to navigating market fluctuations.

Investors and market analysts will be keenly watching how HCL Tech adapts its strategies to improve profitability and AI team utilization while maintaining growth in the coming quarters, especially in light of the provided guidance and hiring plans.

Historical Stock Returns for HCL Technologies

1 Day5 Days1 Month6 Months1 Year5 Years
-1.13%-5.30%-5.99%-10.68%+3.20%+173.92%
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HCL Technologies: Analysts Anticipate Muted Q1 FY26 Performance

0 min read     Updated on 13 Jul 2025, 11:12 AM
scanxBy ScanX News Team
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Overview

HCL Technologies is set to release its Q1 FY26 financial results on July 14. Analysts project flat to slight QoQ growth in revenue and profit after tax, with YoY revenue growth estimated between 7.70% and 8.20%. EBIT margins are expected to range from 17.10% to 17.60%. Deal wins are anticipated to be between $2-3 billion. The company is likely to maintain its FY26 guidance of 2.00-5.00% YoY revenue growth and 18.00-19.00% EBIT margin.

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*this image is generated using AI for illustrative purposes only.

HCL Technologies , a leading Indian IT services company, is set to release its Q1 FY26 financial results on July 14. Analysts are projecting a relatively subdued performance for the quarter, with expectations of flat to slight growth in key financial metrics.

Revenue and Profit Outlook

According to analyst projections, HCL Tech is expected to report:

  • Flat to slight quarter-on-quarter (QoQ) growth in revenue and profit after tax (PAT)
  • Year-on-year (YoY) revenue growth estimated between 7.70% and 8.20%

Profitability and Margins

The company's profitability metrics are forecasted as follows:

  • EBIT (Earnings Before Interest and Taxes) margins are expected to range between 17.10% and 17.60%

Deal Pipeline

Analysts anticipate deal wins for the quarter to be in the range of $2-3 billion, indicating continued business momentum for HCL Technologies.

FY26 Guidance

HCL Tech is likely to maintain its guidance for the fiscal year 2026:

  • Revenue growth: 2.00-5.00% YoY
  • EBIT margin: 18.00-19.00%

The upcoming Q1 FY26 results will provide insights into HCL Technologies' performance amidst the evolving global IT landscape. Investors and industry observers will be closely watching how the company navigates market challenges and capitalizes on growth opportunities in the new fiscal year.

Historical Stock Returns for HCL Technologies

1 Day5 Days1 Month6 Months1 Year5 Years
-1.13%-5.30%-5.99%-10.68%+3.20%+173.92%
HCL Technologies
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