HCL Tech Q1 Earnings Preview: The Q1 results of HCL Tech, India’s third-largest IT company by market capitalisation, are likely to reflect the typical weakness associated with the June quarter. This seasonal softness may have been exacerbated by weak demand amid persistent tariff-related uncertainty.
HCL Technologies will report its Q1 results 2025-26 on Monday, 14 July.
The IT major’s revenue may rise decently year over year (YoY) but may remain muted quarter over quarter (QoQ). Adjusted profit after tax (PAT) may also remain muted yearly and, in fact, may decline quarterly.
Apart from the numbers, revenue guidance for FY26, discretionary spending outlook, deal pipeline, updates on ERD (engineering and R&D services), and deal TCV (total contract value) will be in focus.
Let’s take a look at what key brokerages expect from HCL Tech’s Q1 results:
Phillip Capital
Phillip Capital expects HCL Tech’s revenue to rise 8.7 per cent YoY and 0.8 per cent QoQ. Profit after tax (PAT) may increase 2.2 per cent YoY and 1.1 per cent QoQ.
EBITDA can rise 12.3 per cent YoY and 0.4 per cent QoQ, while EBITDA margin may shrink 10bps QoQ but increase 68bps YoY.
Margins may decline by -20bps QoQ due to weak revenue growth and productivity pass backs offset by operational efficiencies, Phillip Capital said.
“We expect constant currency (CC) revenue to decline by 0.4 per cent QoQ in CC. With a cross-currency benefit of 230bps, reported growth will be positive. Amongst segments, we expect -0.3 per cent, -0.3 per cent and -2 per cent QoQ CC growth for IT services, ERS and software,” said Phillip Capital.
The brokerage firm expects HCL Tech to narrow FY26 growth guidance to 3-5 per cent YoY in CC (2-5 per cent earlier). However, EBIT margins guidance may be maintained at 18-19 per cent range.
Motilal Oswal Financial Services
According to brokerage firm Motilal Oswal Financial Services, HCL Tech’s revenue may rise 7.2 per cent YoY, but may decline marginally sequentially.
Adjusted PAT may see a muted gain of 0.4 per cent YoY, but may decline 0.7 per cent QoQ.
EBITDA may rise nearly 9 per cent YoY, while EBITDA margin may move up to 21 per cent from 20.6 per cent YoY.
“We expect HCL to report a 1.2 per cent QoQ revenue decline in a seasonally weak quarter. Services may decline 1.2 per cent QoQ CC, while the P&P segment may see a 1 per cent drop. Margins are expected to decline 50bp QoQ, in line with the typical Q1 seasonal reset similar to prior years,” said Motilal Oswal.
“We expect BFSI and Hi-tech to perform relatively better. Manufacturing remains under pressure, particularly in auto, though signs of bottoming out are visible. We expect the company to retain its FY26 revenue growth guidance of 2-5 per cent,” said the brokerage firm.
Kotak Institutional Equities
Kotak believes HCL Tech’s CC revenue may decline of 0.8 per cent due to seasonal weakness in IT Services business.
“We forecast QoQ revenue decline of 0.8 per cent each in the services and products segments. Cross-currency tailwind for the quarter stands at 214 bps,” said Kotak.
“EBIT margin will likely decline 60 bps QoQ, in sync with the decline in Services business and the usual productivity pass resets. EBIT margin will increase by 20 bps on YoY comparison. We expect a healthy TCV of deal wins in $2-2.5 billion range. HCL Tech management highlighted a strong pipeline and likely closures of large deals in 1QFY26,” Kotak said.
Kotak expects HCL Tech to retain 2-5 per cent revenue growth guidance for FY26 and 18-19 per cent EBIT margin guidance.
“We expect investor focus on—(1) impact of reciprocal tariff imposed by US on directly impacted segments of manufacturing and retail, (2) nature of deals in the pipeline and likely closure timeframe, (3) state of discretionary spending, (4) pace of enterprise GenAI adoption, new opportunities consequent to AI adoption and likely deflationary impact and (5) environment required to hit aspirational margin band of 19-20 per cent,” said Kotak.
Equirus Securities
Equirus’ estimates show HCL Tech’s revenue may rise 7.8 per cent YoY and may remain flat QoQ. Recurring PAT may increase 0.4 per cent YoY but 0.7 per cent QoQ. EBITDA may rise 6.9 per cent YoY but decline 4.5 per cent QoQ.
Equirus expects HCL Tech to clock dollar revenue growth of 1.4 per cent QoQ, but QoQ dip of 0.9 per cent in CC due to seasonal weakness in IT services and P&P business.
“We expect CC dip of 0.9 per cent QoQ in services. EBIT margins are expected to dip by 77bps QoQ, led by seasonal weakness. We expect no change in HCL Tech CC dollar sales growth guidance of 2-5 per cent (nearly 1-4 per cent organic), both for services and consolidated business for FY26E. We also do not expect any change in its consolidated EBITM guidance of 18-19 per cent for FY26E,” said Equirus.
The brokerage firm pointed out that the demand outlook for ER&D services, P&P, business applications, IMS, and digital services in FY26E will be a key focus.
Moreover, the impact of ongoing macro issues on HCL Tech’s growth/margin outlook or on its clients, if any, and any update on the acquisition strategy in the medium term, capital allocation policy, deal wins, and pipeline will also be in focus.
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