HCL Technologies on Tuesday lowered its FY27 revenue growth guidance to 1–4% year-on-year in constant currency, down from 4–4.5% for FY26, flagging a more fluid demand environment and continued pressure on discretionary spending.
The company also guided for IT services revenue growth of 1.5–4.5% in constant currency for FY27, lower than 4.75%-5.25% for FY26. Ebit margin guidance of 17.5–18.5% was up from 17-18% in FY26.
“As the business environment has become more fluid, it is harder to predict the next quarter,” CEO C Vijayakumar said, adding that some of the current weakness is expected to carry into the coming quarter. The company reported a 10% sequential rise in net profit to Rs 4,488 crore for the January-March quarter, but this fell short of Bloomberg estimates of Rs 4,648 crore.
Revenue rises 0.3% Q-O-Q
Revenue rose 0.3% quarter-on-quarter to Rs 33,981 crore, marginally below the estimated Rs 34,024 crore. In dollar terms, revenue stood at $3,682 million, down 2.9% sequentially, while constant currency revenue declined 3.3% on-quarter, reflecting demand softness.
Operating performance was also weaker than expected, with Ebitda at Rs 6,712 crore compared to estimates of Rs 7,091 crore. Ebit margin came in at 17.2%, or 17.9% excluding restructuring costs, marking a contraction of 40 basis points on a year-on-year basis.
“During the quarter, our performance came below our expectations due to softness in certain parts of our business due to lower discretionary spend and delayed decision making,” Vijayakumar said. He attributed the sequential decline in IT services revenue to seasonality in the software business and delays in procurement decisions toward the end of March.
He added that telecom and select large programmes weighed on performance. “This was primarily driven due to reduction in discretionary spending on telecom as well as discontinuation of two SAP programmes, which happened late in the quarter. While annuity programmess in telecom held steady, we saw select clients scale back discretionary investments across both digital business and engineering services during the quarter,” he said.
The company indicated that emerging areas such as AI-led services continue to see traction, with Advanced AI revenue rising 6.1% sequentially to $155 million. However, overall deal bookings declined to $1,936 million from $3,006 million in the previous quarter, even as total contract value stood at $9,323 million.
Vijayakumar said AI-led efficiencies could lead to deflation of 2–3% annually, though new service lines are expected to offset this. “It should grow between 25 to 30% year on year,” he said, referring to AI-driven revenue streams.
The company declared an interim dividend of Rs 24 per equity share, with April 25 set as the record date and May 5 as the payment date. It also said acquisitions of Jaspersoft and Hewlett Packard Enterprise’s telco solutions business are pending regulatory approvals in the US and have not been factored into guidance.
Geographically, the Americas accounted for 56.3% of revenue, followed by Europe at 27.1% and the rest of the world at 13.7%, while India contributed 2.9%. Among verticals, financial services remained the largest contributor at 21.4%, followed by manufacturing at 18.6%.