HCLTech Reports Q1 Results with 9.7% Decline in Net Profit to Rs 3,843 Crore
HCL Technologies has reported a 9.7% decline in consolidated net profit for the first quarter of FY26, totaling Rs 3,843 crore. This decrease is attributed to increased expenses and a one-time impact from a client bankruptcy. Despite the profit drop, the company has adjusted its revenue growth outlook upward, anticipating stronger demand and deal bookings in the upcoming quarters. Last year, the company recorded a net profit of Rs 4,257 crore during the same period.
Financial Performance Overview
In its latest financial results, HCL Technologies revealed that revenue from operations increased by 8.1%, reaching Rs 30,349 crore compared to Rs 28,057 crore in the first quarter of FY25. The growth was primarily driven by strong performances in various sectors, including technology and services, which saw a growth of 13.7%. Other sectors such as telecom and media, retail and consumer packaged goods, and financial services also contributed positively, with growth rates of 13%, 8.2%, and 6.8%, respectively. CEO C Vijayakumar highlighted that the company achieved a revenue growth of 3.7% year-on-year, supported by a 4.5% growth in constant currency within its services business. However, the operating margin was impacted, falling to 16.3% due to lower utilization rates and increased investments in generative AI and go-to-market strategies.
Restructuring Plans and Future Outlook
During the earnings call, Vijayakumar announced a restructuring program aimed at enhancing the company’s agility in the evolving AI landscape. This initiative will focus on optimizing underutilized facilities, particularly those located outside India, and may involve talent reductions in certain international markets. The CEO stated that the goal of this restructuring is to restore operating margins to between 18% and 19%. He acknowledged that while there will be incremental costs associated with these changes, the company remains optimistic about its financial outlook. Following a stronger-than-expected performance in Q1, HCLTech has revised its constant currency revenue growth guidance for FY26 to a range of 3% to 5%, up from the previous estimate of 2% to 5%.
Employee Dynamics and Dividend Declaration
As of the end of the first quarter, HCL Technologies reported a headcount of 223,151, reflecting a decrease of 269 employees from the previous quarter. The company added 1,984 freshers during this period, with plans for a significantly higher intake in the upcoming quarter, focusing on specialized roles rather than volume. Chief People Officer Ram Sundarajan noted that the proportion of specialized freshers being recruited is gradually increasing, with some elite cadre freshers earning up to three to four times the regular pay in services and software roles, respectively. Additionally, the company’s board declared an interim dividend of Rs 12 per share for FY26, with the record date set for July 18, 2025, and the payment date scheduled for July 28, 2025.
Market Reaction
Following the announcement of its Q1 results, HCL Technologies’ shares closed at Rs 1,619.95 on the Bombay Stock Exchange, marking a decline of 1.04%. The results were released after market hours, and the company’s performance will be closely monitored as it navigates the challenges posed by rising expenses and the need for strategic restructuring in a competitive IT landscape.
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