HCLTech Q1 Results 2025 Highlights: CEO says ’20 bps impact on margins due to client bankruptcy, guidance lower due to delays in signing of new deal’

Biswajit Maity, Sr Principal Analyst at Gartner, said, “In Q2 2025, global markets experienced a slowdown in net-new spending as macroeconomic uncertainties impacted several regions. Nevertheless, the long-term outlook remains optimistic, driven by sustained investments in AI and GenAI digital transformation. Currently, economic volatility, cautious discretionary spending, and increased competition have tempered overall momentum, resulting in only modest revenue growth and subdued performance for the majority of the IT vendors.”

Despite these challenges, he added, HCLTech managed to deliver a moderate growth of 0.3 per cent QoQ, supported by major contract wins and a robust deal pipeline. “The company’s ongoing investment in workplace innovation and its strong commitment to delivering client outcomes have established it as a valuable partner for its clients,” Biswajit Maity said.

HCLTech reported a total contract value (TCV) of $1,812 million in Q1FY26 from new deal wins. This was 7.5 per cent lower from $1,960 million in Q1FY25. On a quarter-on-quarter (QoQ) basis, the decline was steeper at 39.5 per cent, with Q4FY25 having recorded $2,995 million in TCV.

READ MORE: HCLTech TCV slides 39.5 per cent QoQ; Q1 deal wins worth $1.8 billion

Shiv Walia, Chief Financial Officer, HCLTech, said, “HCLTech Q1FY26 INR revenue grew an impressive 8.2 per cent YoY. EBIT for the quarter came in at Rs 4,942 crore and Net Income (NI) at Rs 3,843 crore and at 16.3 per cent and 12.7 per cent of revenue respectively. Our cash generation remains robust with OCF/NI at 129 per cent and FCF/NI at 121 per cent, reflecting the underlying strength of our business model.”

• EBIT at Rs 4,942 crore (16.3% of revenue), down 9.2% QoQ & up 3.1% YoY

• NI at Rs 3,843 crore (12.7% of revenue), down 10.8% QoQ & down 9.7% YoY

• ROIC (on LTM basis) – Company at 38.1%, up 353 bps YoY; Services at 45.2%, up 236 bps YoY

C Vijayakumar, CEO & Managing Director, HCLTech, said, “We had healthy revenue growth of 3.7% YoY supported by good performance in our Services business with 4.5% YoY growth in constant currency. Our operating margin came at 16.3%, impacted by lower utilization and additional Gen AI and GTM investments.”

He further added that the company’s AI offerings are gaining strong traction with clients and have been further enhanced through partnership with OpenAI. “Our pipeline continues to grow as the demand environment was stable during the quarter,” he added.

HCLTech’s board of directors have declared an interim dividend of Rs 12 per equity share of Rs 2 each of the Company for the Financial Year 2025-26. In a regulatory filing, the IT major said, “The Record date for the payment of the aforesaid interim dividend shall be July 18, 2025, and the payment date of the said interim dividend shall be July 28, 2025.”

READ MORE: Q1FY26 Results: HCLTech announces second interim dividend of FY26 at Rs 12 per share

HDFC Securities said, “The IT sector is expected to post mixed revenue growth in Q1, with tier-1 reporting muted CC revenue growth while mid-tier is expected to deliver strong growth. There is a huge cross-currency tailwind in the quarter which will result in strong USD growth QoQ. The companies will maintain their full-year FY26E guidance amid the ongoing global economic uncertainty.”

It further added that factors such as US tariff measures and broader macroeconomic challenges may limit discretionary spending, but the demand deterioration has been lower vs expectation at the start of the quarter.

Anand Rathi Research Team said that within the top-6 IT names, Infosys and LTIM are expected to show approximately 70 bps and 130 bps sequential cc revenue growth, with cc-degrowth in the others. HCL Tech, it added, is expected to show seasonal de-growth of around 60bp.

“We estimate 230 bps cross currency tailwind for HCL.

We are building -1%/-1%/0% QoQ growth in IT Services/ERS/ Product & Platform business in cc terms.

Expect 120bps EBIT margin decline led by impact of productivity pass-back and lower software sales.

We expect $2-2.5 billion of net new TCV in Q1.

We expect HCL to retain its guidance of 2-5% growth guidance.”

HDFC Securities

Net sales

Rs 30,347.00 crore; Up 8.2% YoY

EBIT

Rs 5,343.00 crore; Up 11.4% YoY

APAT

Rs 4,351.00 crore; Up 13.7% YoY

Elara Capital

Revenue

Rs 30,244.90 crore; Up 7.8% YoY

EBIT

Rs 5,162.90 crore; Up 7.7% YoY

Adjusted net profit

Rs 4,154.10 crore; Down 2.4% YoY

JM Financial

Revenue

Rs 30,251.80 crore; Up 7.8% YoY

EBIT

Rs 5,077.20 crore; Up 5.9% YoY

Net profit

Rs 4,017.30 crore; Down 5.7% YoY

In April this year, HCLTech saw ‘strong new bookings of $3 billion’ during the final quarter of FY25 as it reported an 8.05 per cent YoY rise in profit to Rs 4,307 crore. HCLTech concluded the March quarter with its total contract value for new deal wins at $9,268 million.

“We saw very strong new bookings of $3 billion this quarter catalyzed by our AI propositions and integrated GTM organization that was set up at the start of the fiscal year. The strength of our execution should present us good medium-term opportunities emerging out of global uncertainties while we navigate the short-term cautiously,” CEO and MD C Vijayakumar had said.

Earlier in April, HCLTech had released its fiscal fourth quarter earnings report with profit at Rs 4307 crore, up 8.05 per cent in comparison to Rs 3986 crore recorded during the corresponding quarter of previous financial year. It posted revenue from operations at Rs 30,246 crore, posting a growth of 6.13 per cent as against Rs 28,499 crore reported during the fourth quarter of FY24.

In terms of deal wins, Nomura said, HCLTech is expected to post net new deal wins in the range of $2-2.5 billion. Earlier, the company management had highlighted a strong pipeline and likely closures of large deals in Q1FY26.