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    HCL Technologies

    HCLTECH
    Information Technology·12 Jan 2026
    Management Summary

    HCL Technologies reported a strong Q3 FY26, with revenue reaching $3.79 billion, marking a 4.8% YoY growth in constant currency. The company crossed $15 billion in annualized revenue, demonstrating robust scale. Net new bookings were exceptionally strong at $3 billion, a 43% YoY increase, driven by significant traction in AI-led solutions and engineering services. Management raised its full-year revenue growth guidance for both services and company-level, reflecting confidence in its strategic initiatives and market capture.

    Highlights

    8

    • Q3 Revenue: $3.79 billion, up 4.8% YoY and 4.2% QoQ in constant currency.

    • Annualized Revenue: Crossed $15 billion.

    • Net New Bookings: $3 billion, up 17% QoQ and 43% YoY.

    • Operating Margin (excl. one-time labor cost, incl. restructuring): 18.6%, up 111 bps QoQ.

    • Diluted EPS (last 12 months, incl. new labor code): INR 63.35, up 0.7% YoY.

    • Full Year Services Revenue Growth Guidance: Raised to 4.75% to 5.25% in constant currency.

    • Full Year Company Level Revenue Growth Guidance: Raised to 4% to 4.5% in constant currency.

    • Mega Deal: 5-year strategic engagement with TCV of $473 million.

    Guidance & targets

    10
    CategoryTargetPriority
    Profitability
    Operating Margin (excluding restructuring costs)
    recovering that as well in the future
    		Medium
    Profitability
    Full Year EBIT Margin
    17% to 18%
    		High
    Profitability
    Restructuring Cost Impact on Margins
    50 basis points (for full year), similar impact in Q4
    		High
    Profitability
    Recurring Impact of New Labor Law on Margins
    10 or 20 bps
    		High
    Revenue
    Full Year Services Revenue Growth (constant currency)
    4.75% to 5.25%
    		High
    Revenue
    Full Year Company Level Revenue Growth (constant currency)
    4% to 4.5%
    		High
    Capex
    SG&A Investments
    continue to invest on the Al solutions as well as on the GTM
    		High
    Bookings
    Net New Bookings (average per quarter)
    hitting that number [>$2.5 billion]
    		Medium
    Strategic Initiatives
    Legacy Modernization using AI
    very big opportunity
    		Medium
    Product Launch
    AI Force 2.0 General Availability (GA)
    soon
    		Medium
    3 min read

    Detailed Narrative

    HCL Technologies delivered a robust performance in Q3 FY26, reporting a revenue of $3.79 billion, which represents a 4.8% year-over-year and 4.2% quarter-over-quarter growth in constant currency terms. This quarter also marked a significant milestone as the company surpassed $15 billion in annualized revenue. The services business demonstrated strong momentum, growing 5% YoY and 1.8% QoQ, with Engineering and R&D Services (ERS) leading the charge at 10.8% YoY and 3.1% QoQ growth. HCLSoftware also contributed positively, growing 3.1% YoY and an impressive 28.1% QoQ, driven by seasonality and strong demand for its data intelligence portfolio, with annual recurring revenue (ARR) reaching $1.07 billion.

    Profitability saw a healthy improvement, with the operating margin (excluding the one-time📎 impact of new labor code but including restructuring costs) at 18.6%, a 111 basis points increase QoQ. When adjusted for restructuring expenses, Q3 margins stood at 19.4%, only marginally down 13 basis points YoY. The company's Return on Invested Capital (ROIC) for the last 12 months improved significantly to 39.4%, up 277 basis points YoY. Strong cash generation was evident, with operating cash flow at $2.5 billion and free cash flow at $2.35 billion for the last 12 months. The diluted EPS for the last 12 months was INR 63.35, and an interim dividend of INR 12 per share was declared.

    Strategic initiatives, particularly in Artificial Intelligence (AI), were highlighted as key growth drivers. HCLTech reported a 19.9% growth in advanced AI, fueled by Agentic physical AI and AI factory programs. The company's flagship AI Force platform is now deployed across 60 priority accounts, and over 38,000 employees have been trained in GenAI. Bookings were exceptionally strong, with net new bookings reaching $3 billion, a 43% YoY increase, including a mega 5-year strategic engagement worth $473 million with a global apparel retailer. Acquisitions during the quarter, including Telco Solutions Business from HPE and Jaspersoft and Wobby, are expected to further strengthen its offerings in telecom engineering and data and AI.

    Management expressed high confidence in the company's growth trajectory, raising the full-year services revenue growth guidance to 4.75%-5.25% and the company-level revenue growth guidance to 4%-4.5% in constant currency terms. They reiterated their commitment to achieving a full-year EBIT margin guidance of 17%-18%. While acknowledging a one-off📎 restructuring cost impact of 50 basis points for the full year, with a similar impact expected in Q4, management aims to conclude this exercise by the end of the financial year. They also noted that the recurring impact of new labor laws on margins is expected to be limited to 10-20 basis points.

    During the Q&A, management addressed the evolving landscape of AI adoption, emphasizing "Day -1" services like custom silicon for edge inferencing and AI factory services as immediate growth areas. They also foresee legacy modernization using AI as a "very big opportunity" in the next 2-3 years. While the manufacturing vertical showed mixed trends with good traction in aero & defense but muted industrial manufacturing, the overall outlook remains optimistic, driven by strategic investments in AI, a strong pipeline, and disciplined execution.

    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.