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    HCL Technologies Limited

    HCLTECH
    Information Technology·13 Jul 2026
    Management Summary

    HCLTech reported a strong Q1 FY27 with record Q1 bookings of $2.4 billion, driven by AI-led offerings and strategic partnerships. Despite sequential revenue decline due to seasonality and specific vertical headwinds, operating margins improved. The company maintained its FY27 revenue and margin guidance, while announcing a significant strategic investment in AI datacenter infrastructure in India.

    Highlights

    5

    • Net new TCV booking for the quarter was $2.4 billion, highest ever Q1 bookings.

    • Advanced AI revenue stood at $171 million, marking 10.6% QoQ and 62.1% YoY growth.

    • Operating margins stood at 16.9%, an improvement of 39 basis points QoQ and an increase of 56 basis points YoY.

    • Last 12 months ROIC is at 40.7% for the company, up 257 basis points YoY.

    • Interim dividend of INR12 per share declared, bringing LTM payout to 93.2% of net income.

    Concerns

    4

    • Revenue declined by 0.5% sequentially in constant currency due to typical Q1 seasonality and productivity commitments.

    • ERS segment declined 3.7% QoQ and grew only 0.3% YoY, impacted by sharp cuts in discretionary spending in two large US telcos.

    • HCL Software revenue declined 5.3% YoY, despite a 2.2% sequential growth.

    • Healthcare segment is heavily stressed in the US, contributing to a gradual decline over the past eight-nine quarters.

    Key financials

    Metrics

    6

    Periods

    2

    Headline

    5
    • Total Revenue
      3,650 Mn
      YoY+2.6%QoQ-0.5%
    • Operating Margin
      16.9%
      YoY+0.6%QoQ+0.4%
    • EBIT
      616 Mn
    • Net Income
      488 Mn
    • Advanced AI Revenue
      171 Mn
      YoY+62.1%QoQ+10.6%

    LTM

    1
    • Diluted EPS
      ₹66.9
      YoY+6.9%QoQ+4.5%

    Segment breakdown

    Services
    3,351 Mn Revenue
    IT and Business Services
    4.2% Revenue Growth
    Engineering and R&D Services (ERS)
    0.3% Revenue Growth
    HCL Software
    313 Mn Revenue1.063 billion Annual Recurring Revenue
    List

    Order Book

    high confidence

    Inflow this qtr

    USD 2.4 billion

    Composition

    Mega Deal (signed early July, not in Q1 bookings)(other)
    Well-balanced across verticals, service lines and geographies(other)

    Pipeline

    deal pipeline tcv

    Strong pipeline

    "The company reported its highest ever Q1 net new TCV bookings at $2.4 billion, which was well-balanced across verticals, service lines, and geographies. A mega deal signed in early July is excluded from this quarter's bookings."

    Source:
    Prepared remarks

    Capital allocation

    6
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    potential possibilities of funding this through a mix of partners arrangements with silicon and OEM vendors and committed capacity from clients and consumption models where the hardware is financed against contracted demand. Even this could be funded through a mix of equity and debt.

    Dividend

    ₹12/share (interim)

    Payout ratio 93.2%

    M&A

    Jaspersoft

    acquisition · closed

    M&A

    Sarvam

    Other · closed · Consideration ₹NaN (cash)

    M&A

    CTG

    acquisition · pending regulatory

    Guidance & targets

    3
    CategoryTargetPriority
    Revenue
    Revenue Growth (Constant Currency)
    1% to 4%
    		High
    Margin
    EBIT Margin
    17.5% to 18.5%
    		High
    Capex
    AI Datacenter Investment
    INR3,500 crores
    		High

    Jaspersoft Revenue Contribution

    Q2 FY27 onwards
    CurrentNot included in Q1 FY27 revenue
    Target$10 to $15 million per quarter

    Why it matters

    To assess the inorganic growth contribution from the recently acquired Jaspersoft, which was not part of the FY27 guidance.

    We're still working on it, Vibhor. I think we will possibly give maybe $10 to $15 million per quarter in that range, but there's a seasonality involved, so it's going to be that range, I think.

    How to verify

    key_financials.segment_breakdown[name='HCL Software'].metrics[label='Revenue']

    Risks & concerns

    4
    RiskSeverity

    Seasonality in Q1 revenue

    AMJ (April-June) is typically a weaker quarter due to planned revenue declines driven by productivity commitments in large managed services contracts. — Management acknowledged

    low

    Discretionary spending cuts in Tech and Telecom verticals

    Sharp cuts in discretionary spending in two large US telcos impacted the ER&D segment, leading to a decline. — Management acknowledged

    medium

    Stress in US Healthcare segment

    The Healthcare segment is heavily stressed in the US, where most of HCLTech's healthcare revenue comes from, contributing to a gradual decline. — Management acknowledged

    medium

    AI token costs and economic models

    Rising token consumption costs for AI models are a concern, requiring creative ways to reduce overall costs and build more economic models. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “On the mega deal win, the transition is expected to start in a couple of months, and the steady state is expected to be reached only in April of 2027, so which is coming in the next financial year. It will have negligible impact to our revenue in this financial year.”

    Clarifies that the recently announced mega deal will not materially impact FY27 revenue, explaining why guidance wasn't raised despite strong bookings.

    asked by Abhishek Bhandari

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 Bookings and Advanced AI Revenue Growth

    HCLTech reported its highest ever Q1 net new TCV bookings at $2.4 billion, indicating robust demand. The company's advanced AI revenue demonstrated significant growth, reaching $171 million, up 10.6% QoQ and 62.1% YoY. This performance underscores the company's focus on AI-led offerings and its intent to capitalize on AI-related market opportunities.

    02

    Operating Margin Expansion Despite Seasonal Weakness

    Despite Q1 being a seasonally weaker quarter, HCLTech delivered a strong all-round performance with operating margins at 16.9%. This represents an improvement of 39 basis points QoQ and 56 basis points YoY. The margin expansion was supported by lower restructuring expenses (70 bps) and benefit on PDD (20 bps), partially offset by seasonality and decline in ERS revenue.

    03

    Strategic Investment in AI Datacenter Infrastructure

    HCLTech announced a strategic initiative to enter the AI datacenter business in India, planning an initial investment of up to INR3,500 crores with potential to scale to 50 megawatts. This move aims to address the growing demand for AI-ready solutions and sovereign data requirements, positioning HCLTech as a key enabler of India's AI ecosystem. The investment will be phased and funded through a mix of internal accruals, partner arrangements, and committed client consumption.

    04

    AI Strategy and Ecosystem Momentum

    The company's AI strategy, anchored on five pillars, showed significant progress. AI Force is now deployed across 92 client accounts, and advanced AI revenue grew 62.1% YoY. HCLTech also made a strategic investment of $150 million in Sarvam, an Indian full-stack sovereign AI company, and expanded partnerships with Google Cloud and OpenAI. These initiatives aim to build differentiated IP and scale AI-led services.

    05

    Vertical Performance and Headwinds

    While IT and Business Services grew 4.2% YoY and remained flat sequentially, the Engineering and R&D Services (ERS) segment declined 3.7% QoQ and grew only 0.3% YoY. This was attributed to sharp cuts in discretionary spending by two large US telcos. The Healthcare segment also faced stress in the US market, contributing to a gradual decline over the past eight to nine quarters.

    06

    FY27 Guidance Maintained

    HCLTech reiterated its FY27 revenue growth guidance of 1% to 4% in constant currency and EBIT margin guidance of 17.5% to 18.5%. Management noted that the mega deal signed in early July would have negligible impact on FY27 revenue, as its steady state is expected by April 2027. The guidance is organic and does not include acquisitions like Jaspersoft.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.