Investors were keenly awaiting the June 2026 quarter results of IT companies, in a bid to understand if the sector is finally witnessing an upturn in its performance.
Tech Mahindra declared its results after the close of Thursday trading, and its growth in revenues in constant currency terms has been better than the largest IT software services exporter, which had declared its results last week, along with similar sized peers.
Investor pessimism for the IT sector has resulted in the NSE IT Index declining nearly 25% in the current calendar year as compared to an 8% decline in the broader Nifty 50 index.
Constant Currency Beat: Tech Mahindra Defies Sector Gloom
Tech Mahindra reported a 2.6% quarter-on-quarter (q-o-q) growth on constant currency terms in consolidated revenues to Rs 15,711.9 crore in the June 2026 quarter. The growth in revenues reported by Tech Mahindra in June 2026 quarter has given some signs of an upturn in growth in IT services to investors on Dalal Street.
The company benefited from strong growth in certain verticals – for instance, manufacturing accounted for 19.3% of its revenues in the June 2026 quarter, a growth of 9% q-o-q, according to its investor presentation.
Similarly, BFSI segment accounted for 16.7% of Tech Mahindra’s revenues in June 2026 quarter, a growth of 2.7% q-o-q.
Earlier, Tech Mahindra grew its revenue (constant currency basis) by 0.6 % q-o-q in the March 2026 quarter to Rs 15,076 crore, and that was slower than the growth it reported in Q3FY26.
Growth reported by Tech Mahindra and HCL Tech in the June 2026 quarter (constant currency)
| IT Company | Q-o-Q growth (%) in June 2026 quarter |
| Tech Mahindra | 2.6% q-o-q |
| HCL Tech | -0.5% q-o-q |
Earlier, HCL Tech reported its consolidated revenues declined by 0.5% q-o-q in constant currency terms to Rs 34,579 crore in the June 2026 quarter.
In its key IT services division, HCL Tech has highlighted revenues declined 0.7% q-o-q in constant currency.
In certain verticals the company has faced a difficult operating environment – for instance, telecommunications, media, publishing and entertainment accounted for 11.2% of revenues in the June 2026 quarter as against 12.1% in the March 2026 quarter.
And despite the 2.2% q-o-q growth in constant currency terms for the smaller HCL Software division in the June quarter, it could not prevent a 0.5% q-o-q decline in consolidated revenues for the company in the quarter under review.
HCL Software includes revenue recognized from perpetual licenses and compliance revenues along with subscription revenues, support revenues (including those attributable to perpetual licenses) and software-as-a-service (SaaS) revenues.
Margin Expansion: How Headcount Rationalization Fed the Bottom Line
Improved revenue growth q-o-q on a constant currency basis in the June 2026 quarter along with a reduction of 863 employees q-o-q in its total workforce helped Tech Mahindra grow its core operating profit margin by nearly 50 basis points q-o-q to 17.5% in the quarter under review.
Its key employee costs were at 50.1% of revenue from operations in the June 2026 quarter as against 51.7% in the March 2026 quarter, helped by a reduction in its total workforce.
And improved growth along with staff reductions helped Tech Mahindra’s net profit grow nearly 9.6% q-o-q to Rs 1,486.3 crore in the June 2026 quarter.
Earlier, HCL Tech’s operating profit margin rose 20 basis points q-o-q to 19.9% in the June 2026 quarter. HCL Tech had also reduced its workforce by 3,292 employees q-o-q in the June 2026 quarter.
As a result, the key cost, employee expenses, were 56.9% of its consolidated revenues in the June 2026 quarter as compared to 57% in the March 2026 quarter.
A tight check on costs helped HCL Tech’s net profit rise 3% q-o-q to Rs 4,626 crore in the June 2026 quarter.
The AI Lifeline: HCL’s $171 Million Revenue Buffer
Tech Mahindra has not provided specific revenues from its AI business in the June 2026 quarter. The company has highlighted several AI projects that it has won in the quarter under review and currently implementing on a global scale.
Meanwhile, HCL Tech’s Advanced AI revenues were $ 171 million (nearly Rs 1,625 crore) in the June 2026 quarter, a growth of 10.6% q-o-q on a constant currency basis.
Earlier, the company had grown its Advanced AI Revenue by 6.1% in constant currency terms on a q-o-q basis in the March 2026 quarter to $155 million (nearly Rs 1,426 crore).
Workforce Contraction: IT Majors Shed Jobs to Defend Margins
Tech Mahindra’s total employee head count was 146,760 in the June 2026 quarter as compared to 147,623 in the March 2026 quarter.
Meanwhile, HCL Tech has highlighted its employee head count was 223,889 in the June 2026 quarter as compared to 227,181 in the March 2026 quarter.
The TCV Divide: HCL Secures $2.4B Despite Revenue Dip
Tech Mahindra’s growth in TCV (new deal wins) was slower than HCL Tech in June 2026 quarter. Tech Mahindra’s TCV (new deal wins) were $1.07 billion in the June 2026 quarter and broadly flat on a q-o-q basis.
Earlier, HCL Tech’s new deal wins were $ 2.4 billion in the June 2026 quarter as against $1.93 billion in the March 2026 quarter, a strong growth of 24.4% q-o-q.
FY27 Guidance: Flat Projections Stall HCL’s Momentum
Tech Mahindra has not provided a specific growth forecast for FY27.
HCL Tech has kept its growth forecast constant – it expects the key Services revenue to grow 1.5% to 4.5% y-o-y on a constant currency basis during FY27.
And it provided a similar growth guidance while declaring its March 2026 earnings in late April, 2026.
The Valuation Gap: Is Tech Mahindra’s 29.8 P/E Justified?
Here’s a look at the valuations of key IT services companies.
Is the Tech Mahindra stock attractively priced?
| Name of IT Company | Consolidated P/E |
| Tech Mahindra | 29.8 |
| HCL Tech | 17.8 |
| Infosys | 14.6 |
Tech Mahindra had declared its results after the close of Thursday trading, and the stock had already gained nearly 1.2% to Rs 1,515.9.
Tech Mahindra trades at a consolidated P/E of 29.8, and over the past 5 years, it has traded at a P/E between 17 times and 65.5 times.
HCL Tech results were declared after the close of Monday trade, and it has faced selling pressure. However, on Thursday, the stock gained 1.7% to Rs 1,188, and it is hovering above its 52-week low of Rs 1,030 that was reached on 1 July, 2026.
The stock has dropped with investors disappointed with the company’s growth forecast for FY27.
HCL Tech trades at a consolidated P/E of 17.8, and over the past 5 years, the stock has traded between 17.2 times and 33 times.
The IT services sector is poised for a pick-up in revenues, going forward, and investors could add HCL Tech and Tech Mahindra to their watchlist of stocks for 2026.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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