HCLTech reported robust Q1 FY27 results with Net Profit rising 20.34% YoY to ₹4,626 crore compared with ₹3,844 crore in the year-ago quarter, while Revenue increased 14% YoY and 1.4% QoQ to ₹34,579 crore. The company also declared an interim dividend of ₹12 per share, with July 17 fixed as the record date and shareholders to receive the dividend on July 27. In constant currency terms, revenue declined 0.5% quarter-on-quarter but grew 2.6% year-on-year, while EBIT rose 18% YoY with EBIT margin expanding by 56 basis points to 16.9%. The company's total deal bookings stood at $2.41 billion during the quarter, up from $1.94 billion in the March quarter, including the recently announced $1.14 billion mega deal that provides additional comfort around achieving the midpoint of guidance. Revenue from advanced AI services grew 62.1% YoY and 10.6% QoQ in constant currency, highlighting the company's strong AI execution capabilities.
HCLTech shares advanced 2.01% to ₹1,211.30 in early trade on Friday, marking a significant recovery from the previous session's decline. The stock, which is a constituent of the Nifty 50 index, opened the session with strong upward momentum following the company's robust Q1 results. This positive market sentiment reflects investor confidence in the company's financial performance and strategic positioning in the AI services market. The current market assessment by Moneycontrol indicates a bullish sentiment for HCL Technologies, supported by the company's strong financial standing and strategic corporate actions. The stock's market capitalization stands at approximately ₹3,29,313.25 crore, reflecting its position among India's leading technology companies.
Despite beating Q1 estimates, HCLTech shares fell 3.78% to ₹1,175 on the NSE following the earnings announcement, with the stock declining over 3% as the company retained its FY27 guidance indicating continued uncertainty in client spending and slower recovery. The divergence between strong financial performance and negative market reaction highlights investor concerns about valuation and future growth prospects. Motilal Oswal remains the most bullish, maintaining its 'Buy' rating and raising its target price to ₹1,450 from ₹1,400, expecting HCL Technologies to deliver a USD revenue CAGR of around 4% and INR PAT CAGR of 12.0% over FY26-28, with EBIT margins of around 17.8%. However, Citi downgraded the stock to 'Sell' despite the earnings beat and unchanged full-year guidance, with analysts noting that expectations were for management to increase guidance with strong TCV and doubling growth numbers. J.P. Morgan retained its 'underweight' rating, saying the unchanged guidance reflected continued weakness in discretionary technology spending and pressure in telecom and manufacturing accounts, while Jefferies maintained its 'underperform' rating, describing the unchanged growth outlook as the key disappointment despite stronger-than-expected earnings and robust deal wins.
CEO C Vijayakumar used the earnings call to lay out a far broader AI ambition, one that stretches well beyond building generative AI applications into owning key parts of the enterprise AI infrastructure stack. The company's AI narrative has clearly evolved over the past year, with earlier positioning as an AI services provider helping enterprises deploy GenAI solutions, now expanding into AI factories, sovereign AI, AI gateways, AI data centres, GPU infrastructure, AI silicon and Physical AI. This represents an ambition to participate across the full AI value chain rather than remain an implementation partner. Prabhudas Lilladher reported that AI momentum continued with Advanced AI revenue increasing to USD171mn, up 10.6% QoQ CC, highlighting the company's strong AI execution capabilities. The company announced significant AI-focused partnerships and investments during the quarter, including an AI Factory program with an incremental scope of over $180 million for AI data center buildout and plans to invest up to ₹3,500 crore ($370 million approx) to establish AI data centers with potential to scale to 50MW of capacity.
IT & Business Services, which accounted for 75.1% of revenue, grew 4.2% YoY in constant currency, while Engineering & R&D Services recorded 0.3% growth, and HCLSoftware revenue declined 5.3%. By vertical, Public Services posted the strongest constant currency growth at 12.0%, followed by Retail & CPG at 10.1%, Technology & Services at 7.3%, Financial Services at 5.3%, and Manufacturing at 3.7%. Telecommunications, Media, Publishing & Entertainment declined 10.9%. Geographically, the United States remained the largest market, contributing 56.0% of revenue and growing 2.9% YoY in constant currency, while Europe contributed 27.6% of revenue with 0.1% growth, and the Rest of the World grew 10.8%. India, which accounted for 3.3% of revenue, recorded the fastest growth at 16.9%. The company maintained its FY27 guidance of 17.5%-18.5% EBIT margin and 1%-4% constant currency revenue growth, with HCLTech retaining its FY27 guidance despite these challenges, forecasting 1-4% revenue growth, 1.5-4.5% services revenue growth, and an EBIT margin of 17.5-18.5%.
