HCL Technologies on Monday reported a better-than-expected performance for the June quarter, with consolidated net profit rising 3% sequentially to Rs 4,624 crore, ahead of Bloomberg consensus estimates. The company also posted its highest-ever first-quarter net new bookings of $2.4 billion.
The IT services major retained its FY27 revenue growth guidance of 1-4% and the margin guidance of 17.5-18.5%, in constant currency terms.
The company also announced its entry into the full-stack AI market with a proposed investment of up to Rs 3,500 crore to build AI data centres with the potential to scale to 50 MW of capacity. The investment will be made through a new subsidiary and its step-down subsidiaries, HCLTech said in a statement.
The FY27 guidance reflects only organic growth and excludes any contribution from acquisitions, including the recently concluded $240-million Jaspersoft deal. Revenue from operations rose 1.8% sequentially to Rs 34,579 crore, marginally ahead of analysts’ estimates of Rs 34,326 crore. Operating margins expanded by 40 basis points to 16.9% from 16.5% in the preceding quarter, absorbing the impact of restructuring costs.
Expressing optimism over the company’s second quarter outlook, CEO and MD, C Vijayakumar, said the deal pipeline was strong despite some restraint in spending due to continued impact from the West Asia conflict. He acknowledged that AI-led deflation still plagued traditional revenue streams but was confident the company is growing at a faster pace to offset the pressure and deliver net growth.
“We recorded our highest ever Q1 net-new bookings of $2.4 billion and our Advanced AI business grew 10.6% QoQ and 62.1% YoY in constant currency terms. This demonstrates that enterprises are choosing us to lead their AI-led transformation. Combined with the operational efficiencies visible in margin expansion, this momentum gives us the confidence we’re positioned to keep outpacing the market over the medium term,” Vijayakumar said.
Advanced AI revenue stood at $171 million during the first quarter of FY27, up 10.6% sequentially. During the post-earnings conference, Vijayakumar clarified that this figure does not include the $1.14-billion AI contract awarded by Mercedes-Benz earlier this month.
On HCLTech’s entry into full-stack AI infrastructure, Vijayakumar said, “The convergence of AI-led demand, supply constraints and push for digital sovereignty presents a compelling opportunity for us to emerge as a full-stack AI technology solutions provider. Our entry into the AI data center space positions us to capture the full value of this opportunity, as the industry transitions from physical infrastructure to higher-value, AI-ready solutions. Our managed services and outcome-based services to our global clients would also benefit significantly from this investment.”
He described AI infrastructure as a “new growth vector” for the company, citing surging demand for data centres globally. “Global data center demand is set to nearly triple by 2030 to between 5-7GW from the current 1.8 GW, thanks to AI, and in India, that growth is expected to happen at an even faster rate,” he said. Buoyed by sovereign data requirements governments, enterprises and consumer platforms are increasingly mandating that workloads be delivered within the premises of the country itself, presenting a large opportunity in the area.
The proposed business is complementary to the company’s existing capabilities across AI data centre design, DevOps and cloud operations, making the move a “logical extension”, the CEO said. HCLTech is in discussions with multiple clients and is “close to” finalising its first customer with committed capacity.
“HCLTech’s first-quarter results illustrate resilient operational execution, marked by a 20.3% year-over-year increase in net income and expanding EBIT margins,” Shubham Rathore, principal analyst with Gartner said.
“A key catalyst was the robust expansion within their Advanced AI portfolio, which delivered $171 million in revenue. Despite these gains, broader industry constraints impacted top-line momentum, with constant currency revenues declining 0.5% sequentially due to cautious spending in verticals like telecommunications and media. As the market evolves, HCLTech’s healthy deal pipeline and strategic focus on embedding AI will be critical to navigating economic uncertainties and sustaining projected margin performance.”
Separately, the company’s board declared an interim dividend of Rs 12 per equity share of face value Rs 2 each for FY27.