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    HCL Technologies Limited

    HCLTECH
    Information Technology·12 Jan 2026
    Management Summary

    HCLTech delivered a strong Q3 FY26, exceeding expectations with robust revenue growth, record bookings, and improved operating margins. The company raised its full-year services revenue guidance, driven by significant traction in AI-powered solutions and engineering services, alongside strategic acquisitions. While facing some one-time costs and seasonal impacts, management expressed confidence in its growth trajectory and disciplined approach to profitability.

    Highlights

    8

    • Revenue growth of 4.8% YoY and 4.2% QoQ in constant currency, reaching $3.79 billion.

    • Crossed $15 billion in annualized revenue.

    • Net new bookings of $3 billion, up 43% YoY and 17% QoQ.

    • Operating margin (excl. new labor code impact) at 18.6%, up 111 bps QoQ.

    • Full-year services revenue growth guidance raised to 4.75%-5.25% in CC.

    • Strong performance in Engineering and R&D Services (10.8% YoY CC growth).

    • Acquisition of Telco Solutions from HPE and Jaspersoft/Wobby to strengthen offerings.

    • Interim dividend of INR 12 per share declared.

    Concerns

    5

    • Operating margin decreased 94 bps YoY (including restructuring costs).

    • Impact of new labor code on EBIT and Net Income (one-time impact of $109 million).

    • Restructuring costs of 81 basis points impacted Q3 margins, with similar impact expected in Q4.

    • Slight decline in headcount (0.1% QoQ).

    • DSO increased by 3 days QoQ to 81 days due to seasonality in software business.

    Key financials

    Metrics

    19

    Periods

    4

    Headline

    13
    • Revenue
      3,793 Mn
      YoY+4.8%QoQ+4.2%
    • Annualized Revenue
      $15B
    • Operating Margin (excl. new labor code)
      18.6%
      QoQ+1.1%
    • EBIT
      704 Mn
    • Net Income
      537 Mn

    LTM

    4
    • ROIC
      39.4%
      YoY+2.8%
    • Operating Cash Flow
      $2.5B
    • Free Cash Flow
      $2.35B
    • Attrition
      12.4%

    LTM, excl. new labor code

    1
    • Diluted EPS
      ₹60.7

    LTM, incl. new labor code

    1
    • Diluted EPS
      ₹63.35
      YoY+0.7%

    Segment breakdown

    Services
    3,379 Mn Revenue1.8% QoQ CC Growth5% YoY CC Growth45.9% ROIC (LTM)
    IT and Business Services
    1.5% QoQ CC Growth3.8% YoY CC Growth
    Engineering and R&D Services
    3.1% QoQ CC Growth10.8% YoY CC Growth
    Software
    425 Mn Revenue28.1% QoQ CC Growth3.1% YoY CC Growth1.07 billion Annual Recurring Revenue0.6% ARR YoY CC Growth23.1% ROIC (LTM)
    USA
    1.5% YoY CC Growth
    Europe
    4.6% YoY CC Growth
    India
    15.8% YoY CC Growth
    Rest of the World
    22.1% YoY CC Growth
    Financial Services
    8.1% YoY CC Growth
    Technology
    14.4% YoY CC Growth
    Manufacturing
    4.1% QoQ CC Growth
    Retail and CPG
    5.8% QoQ CC Growth
    Public Services
    3.7% QoQ CC Growth
    List

    Order Book

    high confidence

    Inflow this qtr

    USD 3 billion

    Composition

    Applications and Engineering & R&D Services(service line)
    63.0%

    Pipeline

    deal pipeline tcv

    Strong pipeline

    "The company reported strong net new bookings and the highest ACV bookings in four years, driven by traction in applications and engineering & R&D services. The pipeline remains strong."

    Source:
    Prepared remarks

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Dividend

    ₹12/share (interim)

    M&A

    Telco Solutions Business from Hewlett Packard Enterprise (HPE)

    acquisition · closed · Consideration ₹NaN (undisclosed)

    M&A

    Jaspersoft and Wobby

    acquisition · announced · Consideration ₹NaN (undisclosed)

    Liquidity

    Cash USD 3.82 billion

    Guidance & targets

    5
    CategoryTargetPriority
    Revenue
    Full year services revenue growth
    4.75% to 5.25%
    		High
    Revenue
    Full year company level revenue growth
    4% to 4.5%
    		High
    Margin
    Full year EBIT margin
    17% to 18%
    		High
    Profitability
    Restructuring costs impact on margins
    50 basis points
    		Medium
    Profitability
    Recurring impact of new labor code
    10 to 20 bps
    		Medium

    What to watch in Q4 FY26

    5

    Restructuring costs impact in Q4

    next quarter
    Current81 bps impact in Q3
    TargetSimilar impact in Q4, aiming for clean state in new FY

    Why it matters

    To verify the completion of the restructuring exercise and its impact on Q4 margins as guided.

    Our endeavour is to finish this exercise by Q4 and start the new financial year on a clean state. So, I expect a similar kind of charge in the Q4 also.

    Risks & concerns

    5
    RiskSeverity

    Restructuring costs impact on margins

    Restructuring costs impacted Q3 margins by 81 bps, with a similar impact expected in Q4. — Management acknowledged

    medium

    One-time impact of new labor code

    One-time impact on EBIT and Net Income in Q3, with a recurring impact of 10-20 bps expected. — Management acknowledged

    low

    Global market uncertainties and slow spending on traditional offerings

    Uncertainties persist in the global market leading to slow spending growth on traditional offerings. — Management acknowledged

    medium

    Tariff uncertainty in manufacturing vertical

    Tariff uncertainty continues to affect companies in the manufacturing sector. — Analyst acknowledged

    low

    Seasonality in software business

    Seasonality contributed to DSO increase and revenue fluctuations in the software business. — Management acknowledged

    low

    Q&A highlights

    8

    “On the Al conversations last year to this year, definitely, there is a lot more holistic conversation on how Al would change the entire organization. ... The real acceleration in what we are seeing is not necessarily in deploying Al within enterprises, but really "Day -1" services, which are foundational for enabling Al, like a lot of work in our engineering services.”

    Clarifies the shift in AI discussions from point solutions to holistic transformation and highlights 'Day -1' services (foundational AI infrastructure) as the current area of strong traction, especially in engineering services.

    asked by Abhishek Pathak

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Performance Overview

    HCLTech reported a strong Q3 FY26 with total revenue of $3.79 billion, marking a 4.8% YoY and 4.2% QoQ growth in constant currency. The company also achieved an annualized revenue run rate exceeding $15 billion, demonstrating the scale and durability of its growth model. This performance was underpinned by robust contributions from both services and software segments, with services revenue growing 5% YoY and software revenue growing 3.1% YoY in constant currency.

    02

    AI Strategy and Traction

    The company highlighted significant momentum in AI-powered solutions, including physical AI, AI Factory, and custom silicon engineering. Advanced AI solutions grew 19.9%, with specific SKUs of their AI Force platform deployed across 60 priority accounts. Engineering and R&D Services (ERS) showed strong growth of 10.8% YoY in constant currency, driven by demand for AI engineering services and custom silicon development. Management noted a shift towards holistic AI transformation, with 'Day -1' services (foundational AI infrastructure) seeing strong traction.

    03

    Record Bookings and Strategic Deal Wins

    HCLTech secured net new bookings of $3 billion, representing a 17% QoQ and 43% YoY increase, with ACV bookings reaching a four-year high. A notable win was a 5-year strategic engagement with a global apparel retailer, valued at $473 million TCV, focused on modernizing applications and data landscapes using the Agentic AI Force 2.0 platform. The company also added 1 client in the $100 million category and 3 in the $50 million category, reflecting strong client mining.

    04

    Software Business Momentum and Strategic Acquisitions

    The HCLSoftware business delivered strong performance, growing 28.1% QoQ and 3.1% YoY in constant currency, with annual recurring revenue at $1.07 billion. This growth was fueled by seasonality and strong traction in its data intelligence portfolio. HCLTech also announced the acquisition of Telco Solutions from HPE to enhance telecom engineering capabilities and Jaspersoft and Wobby to strengthen its Data and AI division's offerings, aiming for a unified end-to-end data and analytics platform.

    05

    Profitability and Margin Management

    The operating margin, excluding the one-time📎 impact of the new labor code, stood at 18.6%, an increase of 111 basis points QoQ. While restructuring costs impacted Q3 margins by 81 basis points, management expressed confidence in recovering future margins, expecting a similar impact in Q4 to conclude the exercise. The company's ROIC for the last 12 months improved to 39.4%, up 277 basis points YoY, reflecting a disciplined approach to profitability and capital management.

    06

    Raised Guidance and Shareholder Returns

    HCLTech raised its full-year services revenue growth guidance to 4.75%-5.25% in constant currency and company-level guidance to 4%-4.5% in constant currency, while maintaining its EBIT margin guidance of 17%-18%. The Board declared an interim dividend of INR 12 per share, with a last 12 months payout of INR 54 per share, representing 88.8% of net income. This reflects confidence in sustained growth and commitment to shareholder returns.

    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.