Is HCL Technologies' Q1 Net Profit Decline a Cause for Concern?
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Synopsis
HCL Technologies has reported a 10% drop in net profit for Q1 FY26, yet revenue has increased by 8% year-on-year. The company remains optimistic about future growth, driven by AI initiatives and strategic partnerships. With an interim dividend announced, stakeholders are keenly observing HCL's market performance.
Key Takeaways
- 10% decline in net profit for Q1 FY26.
- 8% growth in revenue from operations.
- Interim dividend of Rs 12 per share announced.
- Revenue growth expectations of 3% to 5% for FY26.
- Focus on AI investments and partnerships.
Mumbai, July 14 (NationPress) - HCL Technologies disclosed on Monday that it has experienced a 10 percent decrease in its consolidated net profit for the first quarter (Q1) of FY26, reporting Rs 3,843 crore, down from Rs 4,257 crore during the same quarter last year (Q1 FY25).
Despite this profit decline, HCL Tech achieved an 8 percent year-on-year (YoY) growth in its revenue from operations, which climbed to Rs 30,349 crore compared to Rs 28,057 crore in Q1 FY25, as stated in its stock exchange filing.
On a sequential basis, the topline experienced a slight increase of 0.3 percent from Rs 30,246 crore in the preceding quarter.
The IT giant also declared an interim dividend of Rs 12 per share for the financial year 2025-26.
The record date for this dividend is July 18, and payments will be processed on July 28.
Looking forward, the organization anticipates its revenue and services revenue to expand between 3 percent and 5 percent in constant currency for FY26.
The EBIT margin forecast remains between 17 percent and 18 percent, as mentioned in the filing.
Chairperson Roshni Nadar Malhotra remarked that HCL Technologies is committed to the ethical use of artificial intelligence (AI), emphasizing that AI is now essential to the growth strategies of global businesses.
She further noted that the company’s strategic alliances and capabilities ensure that its AI-driven solutions provide tangible value to clients.
CEO and Managing Director C. Vijayakumar pointed out that revenue grew by 3.7 percent YoY in constant currency, with the services segment expanding by 4.5 percent.
The operating margin was reported at 16.3 percent, attributed to lower employee utilization and increased investments in generative AI and market strategies.
Vijayakumar added that HCL Tech’s AI offerings are being well-received by clients and that its recent collaboration with OpenAI has bolstered its market position.
He noted that the company’s deal pipeline is expanding in a stable demand landscape, positioning HCL Tech for growth as the sole IT service provider rated as ‘Customer’s Choice’ across all six Gartner Voice of Customer quadrants related to IT services.
Point of View
It's crucial to recognize the intricate balance between profit margins and revenue growth in the tech sector. HCL Technologies, while facing a decline in net profit, showcases resilience through its revenue growth and commitment to AI. This reflects a broader trend in the industry where innovation and adaptation are key to sustained success.
NationPress
14/07/2025
Frequently Asked Questions
What was HCL Technologies' net profit for Q1 FY26?
HCL Technologies reported a net profit of Rs 3,843 crore for Q1 FY26, which is a 10% decrease from Rs 4,257 crore in Q1 FY25.
How much revenue did HCL Technologies generate in Q1 FY26?
HCL Technologies generated Rs 30,349 crore in revenue for Q1 FY26, marking an 8% increase compared to the same quarter last year.
What is the interim dividend announced by HCL Technologies?
HCL Technologies announced an interim dividend of Rs 12 per share for the financial year 2025-26.
What are HCL Technologies' growth expectations for FY26?
HCL Technologies expects its revenue and services revenue to grow between 3% and 5% in constant currency during FY26.
Who is the CEO of HCL Technologies?
The CEO and Managing Director of HCL Technologies is C. Vijayakumar.
