HCLTECH Q4 Call Highlights: Telecom Trimmed, AI Scaled and $3B Deal Wins!

HCL Technologies Ltd, a provider of software and IT infrastructure services, in its Q4 earnings call projected FY26 revenue growth of 2-5%, with strong Q4 bookings , despite foreseeing impacts on retail and manufacturing sectors due to potential tariffs. Management emphasized AI-led transformation deals delivering 20-50% efficiency improvements and noted its ER&D business saw 75% year-over-year growth in bookings. Additionally, company’s software business grew 3.5% with 200 basis points margin improvement due to product modernization, better analyst ratings, and expansion into emerging markets. HCLTECH expressed cautious optimism, highlighting their “all-weather portfolio” that performs well in various economic conditions.

HCL Technologies reported a mixed Q4 FY25 performance with revenue up 6.1% year-over-year and 6.2% quarter-over-quarter, though constant currency revenue declined 0.8% quarter-over-quarter due to seasonal factors and a planned telecom deal scale-down. Net profit grew 8.1% year-over-year to INR4,309 crore but fell 6.2% quarter-over-quarter, with EBIT margin contracting to 18% from 19.5% due to wage hikes, furloughs, and acquisition costs. The company secured impressive deal wins with a total contract value of $2,995 million. For FY26, HCLTech projects 2-5% revenue growth, with the lower forecast assuming weaker discretionary spending and the upper end banking on large deal closures. Recent strategic moves include integrating NVIDIA AI and Google Cloud Partner Specializations while securing key deals in AI-driven contact centers, digital transformation, and semiconductor development.

Continue Reading: Unearth the Vital Insights from HCL Technologies Ltd’s Earnings Call!

Financial/Operational Metrics:

• Revenue: INR30,695 crores, up 6.1% YoY.
• Net Income: INR4,309 crores, up 8.1% YoY.
• EPS: INR15.90, up 8% YoY.
• Total Headcount: 223,420, up 2,665.
• LTM Attrition: 13%, up from 12.4% YoY.

FY26 Outlook:

• Revenue Growth: 2-5% YoY in CC.
• Services Revenue Growth: 2-5% YoY in CC.
• EBIT Margin: 18-19%.

 

Analyst Crossfire:

• North America Performance and Retail CPG Impact, Guidance Caution and Deal Deferrals (Ravi Menon – Macquarie): A $28 million sequential decline in North America was due to the completion of a large retail CPG program, as flagged last quarter, with no major surprises otherwise. The 2–5% FY26 guidance assumes environmental deterioration, with the lower end reflecting no meaningful growth and a deal deferral not tied to tariffs but general market conditions (C Vijayakumar – CEO).

 

• Recessionary Environment Disconnect, ER&D Growth Outlook (Sudheer Guntupalli – Kotak): Despite a 50–60% U.S. recession probability, guidance reflects confidence in Q4’s strong $3 billion bookings and pipeline, though 2–5% growth is modest due to expected deterioration. ER&D bookings grew 75% YoY, driven by strong client mindshare and joint go-to-market strategies, with optimism for FY26 growth despite potential macro impacts (C Vijayakumar – CEO).

 

• Guidance Upside and Cost Takeout Nature, GCC (Global Capability Centers) Expansion and Vendor Preference (Abhishek Pathak – Motilal Oswal): Upper-end guidance assumes stable demand and Q1 deal closures, with cost takeouts now AI-driven, tied to modernization and transformation, not just labor shifts. No strong view on cost pressures halting GCC expansion, but vendors may regain preference in a cost-focused scenario (C Vijayakumar – CEO).

 

• Net New Deal Wins & AI-Driven Workforce Reduction (Gaurav Rateria – Morgan Stanley): Q4’s $3 billion bookings were not bunched but conversions of long-cooked deals, with a strong pipeline for Q1/H1 closures. FY25’s 4.8% services revenue growth with a 2% headcount drop reflects non-linearity, aiming for a 50% agentic delivery model, reducing location dependency (C Vijayakumar – CEO).

 

• Software Business Growth and Margin Improvement (Ashwin Mehta – Ambit): Software business grew 3.5% in FY25 with a 200 basis point margin increase, driven by product modernization, improved analyst ratings (moving to leaders quadrant), and expansion in India, Middle East, and emerging markets. Strong demand for products like marketing automation and cloud migration of existing clients supports growth parity with services (C Vijayakumar – CEO).