The third quarter earnings season for India's IT sector has commenced on an encouraging note, with two leading software exporters delivering results that exceeded market expectations despite facing a traditionally challenging period due to holiday impacts.

Strong Order Booking Performance

Both companies demonstrated robust business momentum through their order acquisition metrics. The standout performer was HCL Technologies , which achieved a nine-quarter high in new order bookings, while TCS continued its consistent deal-winning streak.

Revenue Growth Trends and Guidance

HCL Technologies marginally improved its FY26 revenue growth guidance for the services segment to 4.75-5.25% from the earlier projection of 4-5% in constant currency terms. This upward revision reflects management's confidence in sustained business momentum.

An analysis of trailing 12-month (TTM) dollar-denominated revenue reveals contrasting trajectories for the two companies. TCS experienced a gradual deceleration in year-on-year top-line growth, with TTM revenue declining by 0.70% in the December quarter, compared to 5.40% growth in the comparable quarter two years ago.

Market Dynamics and Strategic Focus

According to HCL Technologies management, delays in discretionary spending are primarily affecting traditional transformation projects. However, investments in new technology platforms are gaining traction, particularly in:

• AI enablers such as datacenters
• Semiconductor solutions
• Generative AI applications
• Physical AI including robotics and automated vehicles

This market shift explains TCS's recent strategic announcements regarding investments in datacenter-related solutions as the company seeks to regain revenue momentum.

Workforce Management Strategies

The two companies have adopted different approaches to human resource management. HCL Technologies has renewed its focus on fresh talent acquisition, adding 10,000 freshers in the nine months to December 2025, compared to 6,000 in the year-ago period. In contrast, TCS has been implementing workforce optimization measures.

Market Outlook

For TCS, the declining TTM trend despite sustained new deal flow raises operational concerns, as it suggests challenges in deal ramp-up amid delayed client decision-making. The negative incremental TTM revenue of $216.00 million marks the first such occurrence in 20 quarters since December 2020, when pandemic impacts affected performance.

While TCS faces near-term pressure in translating deals into revenue growth, HCL Technologies appears positioned for potential rerating given its consistent growth trajectory, improved guidance, and strategic positioning in emerging technology segments.

HCL Technologies delivered a mixed performance in its third quarter, showcasing revenue growth while experiencing a decline in net profitability. The IT services major reported results that exceeded revenue expectations but fell short on bottom-line performance, reflecting the challenging operating environment in the technology sector.

Financial Performance Overview

The company's quarterly financial metrics present a contrasting picture of operational performance:

Revenue Growth and Operational Metrics

HCL Technologies demonstrated solid revenue momentum with quarterly revenue reaching ₹3,387.40 crores, marking an increase from ₹3,194.20 crores in the previous quarter. This performance exceeded analyst estimates of ₹3,336.00 crores, indicating stronger-than-expected demand for the company's services.

The company's constant currency revenue growth of 4.80% year-on-year positioned it well within its revenue guidance range of 3-5%. This performance demonstrates the company's ability to maintain growth momentum despite market headwinds.

Services Revenue Performance

The services segment showed particularly strong performance with constant currency revenue growth of 5.00% year-on-year. This growth rate aligns with the upper end of the company's full-year services revenue growth guidance of 4-5%, suggesting robust execution in core service offerings.

Profitability and Margin Analysis

While revenue performance was encouraging, profitability metrics presented a mixed picture. Net profit declined to ₹407.60 crores from ₹423.50 crores quarter-on-quarter, representing a decrease that significantly missed analyst expectations of ₹474.70 crores.

However, operational efficiency showed improvement with EBIT rising to ₹628.50 crores from ₹550.20 crores in the previous quarter. The EBIT margin expanded to 18.56% from 17.22%, surpassing analyst estimates of 18.30% and demonstrating effective cost management initiatives.

Growth Trajectory Assessment

The company's performance against its guidance metrics indicates steady progress in revenue generation. With constant currency revenue growth of 4.80% year-on-year falling within the 3-5% guidance range, HCL Technologies appears to be executing its growth strategy effectively while navigating market challenges.