HCL Tech Q4 results disappoint. What’s next?

However, HCL Tech’s Q4FY26 results declared well after the closing of Tuesday trade were a disappointment. HCL Tech has performed worse than the ‘laggard’ Wipro as well as the largest software exporter in the March 2026 quarter.

Performance in the March 2026 quarter

 HCL Tech – Constant currency revenue growth 

The Noida-based company has highlighted that its constant currency revenues was negative 3.3% q-o-q to Rs 33,981 crore in the March 2026 quarter. HCL Tech performance in Q4FY26 was much worse that what it reported in the December 2025 quarter.

HCL Tech had reported a 4.2% q-o-q constant currency growth in its revenues to Rs 33,872 crore in the December 2025 quarter.

The lackluster performance in the March 2026 quarter can be attributed to several factors – its core IT services revenues declined 0.1% q-o-q in constant currency to Rs 25,443 crore in the quarter under review. In verticals like telecommunications, media, publishing and entertainment, they accounted for 12.1% of the company’s services revenues in March 2026 quarter as against 12.5% in the December 2025 quarter.

Also, its Retail and CPG vertical accounted for 9.7% of its services revenue in Q4FY26 as against 9.9% in the December 2025 quarter.

Another disappointment with regard to HCL Tech’s performance in Q4FY26 was its smaller HCL Software division which reported a 28.1% constant currency decline q-o-q in the quarter. This division accounted for 8.3% of its revenues in Q4FY26 as against 11.2% in the December 2025 quarter.

In contrast, the HCL Tech has highlighted a strong 28.1% q-o-q constant currency growth in its smaller, HCL Software in Q3FY26 – this division includes subscription and support revenue including all term subscription revenues, support revenues (including those attributable to perpetual licenses) and software-as-a-service (SaaS) revenues.

Strong performance in the HCL Software in Q3FY26 helped the company to report a 4.2% q-o-q constant currency growth in its revenues to Rs 33,872 crore in the December 2025 quarter.

The third and fourth quarters of a financial year are typically seasonally weak quarters for IT companies. In the March quarter, clients in US and Europe are often still deciding the size of IT budgets for the calendar year, and which projects they will focus on.

Operating margins under pressure in Q4FY26

HCL Tech’s core operating margin declined 220 basis points q-o-q to 19.5% in the March 2026 quarter. The key cost, employee expenses, were 57% of its consolidated revenues in the March 2026 quarter as compared to 55.7% in the December 2025 quarter.

The  company added nearly 802 employees q-o-q in the March 2026 quarter.

In contrast, the Noida-based company’s core operating profit margin was 21.7% in the December 2025 quarter, a growth of 120 basis points on a quarter-on-quarter basis.   

The company’s net profit however, grew 10% q-o-q to Rs 4,490 crore in the March 2026 quarter, on account of a low base effect in Q3FY26. In Q3FY26, the company faced a one-time hit of Rs 956 crore on account of the new labour code.

Future orders – TCV – new deal wins – very disappointing trend

With regard to future growth opportunities, another parameter of the company was disappointing in Q4FY26 – HCL Tech’s TCV (new deal wins) was at $ 1.93 billion in the March 2026 quarter.

HCL Tech’s TCV (new deal wins) was at $ 3 billion in the December 2025 quarter, a rise of 17% on a q-o-q basis.

The Street may be disappointed with the growth outlook for HCL Tech, given the sluggish trend in TCV.

The Talent War – focusing on long-term opportunities 

HCL Tech’s head count was 227,181 in the March 2026 quarter as against 226,379 in the December 2025 quarter.

AI-related revenues – lackluster growth

Growth in AI-revenues was also fairly lackluster for HCL Tech – its Advanced AI Revenue at $155 m (nearly Rs 1,426 crore), a growth of 6.1% in constant currency terms on a q-o-q basis in the March 2026 quarter.

In the December 2025 quarter, HCL Tech’s Advanced AI quarterly revenue at $146 million (nearly Rs 1,314 crore), up 19.9% on a quarter-on-quarter basis on constant currency terms.

Globally, AI  is driving growth in the IT sector and investors will also be monitoring AI-revenue growth for HCL Tech and other Indian IT service companies.

Growth Guidance – A glimpse into FY27

HCL Tech has guided for slower growth in FY27 – it expects services revenue growth to be between 1.5% – 4.5% y-o-y in constant currency terms for FY27.

In contrast, HCL Tech while declaring its Q3 FY26 results in January 2026 said it expected its services revenue growth to be between 4.75%-5.25 % y-o-y in constant currency for FY26 

 Is HCL Tech attractively priced?

HCL Tech declared its results after the close of Tuesday trade, and the stock ended the day’s trade 0.7% higher at Rs 1,438. HCL Tech stock has also recovered from its 52-week low of Rs 1,275.7 that was reached on 16 March 2026.

HCL Tech trades at a consolidated P/E of 22.8 times, according to Screener.in

Larger rival, Infosys trades at a consolidated P/E of 18.5 times. Infosys will declare its results on April, 23. In effect, HCL Tech trades at a premium to Infosys.

Given the results and the muted guidance, it will be interesting to see how investors react when markets open. It may be a good idea to add HCL Tech to your watchlist  to see what happens from here on.

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article.

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