HCLTech Q1 FY26 net profit down 9.7 pc to Rs 3,843 crore; revenue rises 8.1 pc to Rs 30,349 crore

New Delhi, Jul 14 (PTI) IT services firm HCL Technologies on Monday posted a 9.7 per cent drop in consolidated net profit for the June quarter, hurt by higher expenses and one-time impact of a client bankruptcy, but raised the lower end of revenue growth outlook for the full fiscal on booking expectations in coming quarters.

The firm had logged a net profit (attributable to owners of the company) of Rs 4,257 crore in the year-ago period, according to a regulatory filing.

HCLTech CEO and MD C Vijayakumar also announced plans to execute a restructuring programme on both the people and non-people side, aimed at achieving structural agility to address market demand in the AI era.

The restructuring, he said, will involve optimising unutilised facilities, mostly in locations outside India, and talent ramp down in geographies outside India.

The impact of this restructuring plan, which is expected to begin in the current quarter, is factored into the growth guidance, he said.

"On the restructuring program, our objective is to get back to our 18 per cent to 19 per cent margins. There will be incremental costs involved in achieving this. That is also the reason we have taken our guidance to be a little lower this year," he said during the company's earnings call.

Revenue from operations for the quarter under review was 8.1 per cent higher at Rs 30,349 crore against Rs 28,057 crore in Q1FY25.

Revenue was driven by growth in technology and services (13.7 per cent), telecom and media (13 per cent), retail and CPG (8.2 per cent), and financial services (6.8 per cent). Seen sequentially, profit fell 10.7 per cent, while revenue was marginally up by 0.3 per cent.

The Noida-headquartered company saw a 9.2 per cent increase in overall expenses during the first quarter of FY26, which included employee benefit expenditure, as well as outsourcing and finance costs, which impacted the profit.

Vijayakumar said Q1 was historically the weakest quarter for the company, although the environment, with some variations, mainly remained stable and did not deteriorate as feared at the start of the quarter.

"Our operating margin came in at 16.3 per cent, which was lower than our plan. While Q1 has been historically the weakest quarter for us, the below plan operating margin was driven by the fact that our utilisation dropped due to a delay in ramp-up for a specific program.

"We encountered ramp downs in specific areas, which resulted in a larger bench, also due to productivity benefits that we brought about. It was also due to demand-supply mismatch between skills and locations," he said.

The first quarter of FY26 saw a one-time impact of 20 basis points from a client bankruptcy, he said.

Additionally, a large consolidation deal in financial services was not accounted in the TCV of Q1. Also, two large deals that were expected to close in Q1 could not be completed due to procedural delays, and are expected to conclude this month and reflect in Q2 TCV.

For FY26, the company has upped the lower end of the revenue guidance band, which is now pegged at 3-5 per cent, from 2-5 per cent projected at the start of the fiscal year, in constant currency.

The growth guidance is motivated by a better performance in Q1, and the company is optimistic of meeting the guidance, supported by "superior revenue growth and positive booking expectations" from the upcoming quarters, Vijayakumar said.

"We had healthy revenue growth of 3.7 per cent YoY supported by good performance in our Services business with 4.5 per cent YoY growth in constant currency. Our operating margin came at 16.3per cent, impacted by lower utilisation and additional Gen AI and GTM investments," the CEO said.

He said the company's AI propositions were resonating well with clients and have been augmented further by its partnership with OpenAI.

The company is investing in an AI-driven data lifecycle management platform, he said.

HCLTech's employee count at the end of the quarter stood at 223,151, down 269 on a sequential basis. The company added 1,984 freshers during the quarter, and will see a significantly higher year-on-year intake of freshers in the ongoing quarter, according to the company's Chief People Officer Ram Sundarajan.

"The focus on freshers is more around specialisation, not necessarily about the numbers. The percentage of freshers that we are now bringing on board through specialisation is gradually increasing.

"When we talk about specialisation, we also talk about an elite cadre where the compensation level for freshers are significantly higher...in our services business, the elite engineers...their compensation levels are up to three times what we pay for the regular cadre of freshers. In our software business, it is up to four times what we pay for the regular cadre of freshers," he said.

The company's board has declared an interim dividend of Rs 12 per equity share of Rs 2 each for FY26.

"The record date for the payment of the aforesaid interim dividend shall be July 18, 2025, and the payment date of the said interim dividend shall be July 28, 2025," the company said in the filing.

Shares of HCLTech settled 1.04 per cent lower at Rs 1,619.95 apiece on the BSE on Monday. The financial results were announced after the closing of market hours. PTI ANK MBI ANK MR MR