HCLTech trailed market estimates with a 9.7% year-on-year decline in quarterly net profit due to higher costs and the one-time impact of a client’s bankruptcy. Profit fell 10.8% sequentially.
India’s third-largest software services company reported a net profit of Rs 3,843 crore in the three months ended June, historically a soft quarter for the software business. Margins fell 16.3% during the quarter amid lower employee utilisation “due to delay in implementation and ramp-down of a specific program, which resulted in a larger bench.”
“We also had a one-time impact from a client bankruptcy,” said C Vijayakumar, HCLTech’s chief executive.
For the June quarter, consolidated revenue grew 8% to Rs 30,349 crore from a year ago, and 0.3% from the preceding quarter, helped by growth in the financial services segment, engineering and R&D services (ER&D), and healthy business from Europe and India. In constant currency (cc) terms, revenue dipped 0.8% sequentially but rose 3.7% YoY to $3.55 billion for the quarter.
ET’s analyst poll estimated net profit to fall 1.9% quarter-on-quarter (q-o-q) to Rs 4,226 crore and revenue with a flat growth at Rs 30,271.4 crore.
Optimistic of closing two large deals carried forward from the June quarter to the fiscal second quarter due to procedural delays, the Noida-based company revised the lower end of its revenue guidance for FY26 to 3-5% from the earlier 2-5%. Deal growth came in lower at $1.8 billion in TCV (total contract value) from $2.99 billion in the March quarter.
“(They are) unrelated to external or macro factors. We are optimistic about their conversion, and if all goes as per plan, the TCV number should see a step up in the coming quarter,” Vijaykumar said.
HCLTech’s larger rival Tata Consultancy Services (TCS) kicked off the earnings season last week, reporting weaker-than-expected numbers with revenue falling for the third consecutive quarter to $7.4 billion. In constant currency terms, revenue fell 1.6% sequentially and 3.1% YoY while net profit rose 5.9% YoY and 4.4% QoQ to Rs 12,760 crore.
HCLTech’s board declared an interim dividend of Rs 12 per share for FY26.
The IT major is planning to restructure its manpower and overall operations. “The plan consists of two components. One is a lot of facilities that we are not utilising, mostly in locations outside India, we believe we should optimise…especially some of it related to our acquisitions. The second is also there will be some talent ramp down that has happened, especially in some of the geographies outside India,” Vijayakumar said.
HCLTech’s operating margin slipped to 16.3% from 17.1% in the June quarter last year and 18% in the March quarter. It also lowered margin outlook to 17-18% from the previously guided 18.0%–19.0%.
The company reduced 269 employees, taking its overall employee base to 223,691. This comes after a net addition of 2,665 employees, including 1,805 freshers, during the preceding quarter. The company expects annual fresher intake this fiscal year to surpass last year’s 7,826.
Further, the company plans to hire specialised freshers, comprising 15-20% of its FY26 fresher hiring plans. “In our services business, the elite engineers that we bring on board, their compensation levels are up to four times higher than what we pay to our regular cadre,” said Ramachandran Sundarajan, chief people officer.
India’s third-largest software services company reported a net profit of Rs 3,843 crore in the three months ended June, historically a soft quarter for the software business. Margins fell 16.3% during the quarter amid lower employee utilisation “due to delay in implementation and ramp-down of a specific program, which resulted in a larger bench.”
“We also had a one-time impact from a client bankruptcy,” said C Vijayakumar, HCLTech’s chief executive.
For the June quarter, consolidated revenue grew 8% to Rs 30,349 crore from a year ago, and 0.3% from the preceding quarter, helped by growth in the financial services segment, engineering and R&D services (ER&D), and healthy business from Europe and India. In constant currency (cc) terms, revenue dipped 0.8% sequentially but rose 3.7% YoY to $3.55 billion for the quarter.
ET’s analyst poll estimated net profit to fall 1.9% quarter-on-quarter (q-o-q) to Rs 4,226 crore and revenue with a flat growth at Rs 30,271.4 crore.
Optimistic of closing two large deals carried forward from the June quarter to the fiscal second quarter due to procedural delays, the Noida-based company revised the lower end of its revenue guidance for FY26 to 3-5% from the earlier 2-5%. Deal growth came in lower at $1.8 billion in TCV (total contract value) from $2.99 billion in the March quarter.
“(They are) unrelated to external or macro factors. We are optimistic about their conversion, and if all goes as per plan, the TCV number should see a step up in the coming quarter,” Vijaykumar said.
HCLTech’s larger rival Tata Consultancy Services (TCS) kicked off the earnings season last week, reporting weaker-than-expected numbers with revenue falling for the third consecutive quarter to $7.4 billion. In constant currency terms, revenue fell 1.6% sequentially and 3.1% YoY while net profit rose 5.9% YoY and 4.4% QoQ to Rs 12,760 crore.
HCLTech’s board declared an interim dividend of Rs 12 per share for FY26.
The IT major is planning to restructure its manpower and overall operations. “The plan consists of two components. One is a lot of facilities that we are not utilising, mostly in locations outside India, we believe we should optimise…especially some of it related to our acquisitions. The second is also there will be some talent ramp down that has happened, especially in some of the geographies outside India,” Vijayakumar said.
HCLTech’s operating margin slipped to 16.3% from 17.1% in the June quarter last year and 18% in the March quarter. It also lowered margin outlook to 17-18% from the previously guided 18.0%–19.0%.
The company reduced 269 employees, taking its overall employee base to 223,691. This comes after a net addition of 2,665 employees, including 1,805 freshers, during the preceding quarter. The company expects annual fresher intake this fiscal year to surpass last year’s 7,826.
Further, the company plans to hire specialised freshers, comprising 15-20% of its FY26 fresher hiring plans. “In our services business, the elite engineers that we bring on board, their compensation levels are up to four times higher than what we pay to our regular cadre,” said Ramachandran Sundarajan, chief people officer.
