HCLTech Q2 Results: Revenue up 11.5% but misses estimates, net profit up 21.2%
Bengaluru: HCL Technologies Ltd. has narrowly missed revenue estimates for the July-September quarter as clients hold back technology spending and AI upends the business model of India's $315-billion IT services industry.
Consolidated revenue rose 11.5% to ₹35,620 crore ($3.72 billion) in the second quarter of the ongoing fiscal. Analysts, on average, expected revenue to come in at ₹35,686 crore, according to data compiled by LSEG. Net profit rose 21.2% to ₹5,132 crore, compared with analysts' estimate of ₹4,859 crore. Annualised AI revenue rose to $219 million in the reporting quarter from $171 million in the previous quarter.
HCLTech has now narrowed its annual revenue growth forecast to 2.5% to 4% from 1% to 4% in the previous quarter. Most brokerages expected the company to retain the forecast.
Quick answers to key questions
•5 QUESTIONS
1
What were HCLTech’s Q2 revenue and net profit?⌵HCLTech reported consolidated revenue of ₹35,620 crore, up 11.5% year on year, and net profit of ₹5,132 crore, up 21.2%.
2
Did HCLTech meet revenue estimates in Q2?⌵No. Revenue of ₹35,620 crore was slightly below analysts’ average estimate of ₹35,686 crore. Net profit, however, exceeded the estimate of ₹4,859 crore.
3
How much did HCLTech’s AI revenue grow in Q2?⌵Annualised AI revenue rose to $219 million in Q2, from $171 million in the previous quarter.
4
What were HCLTech’s Q2 deal wins and operating margin?⌵New deal wins totalled $3.26 billion, compared with $2.4 billion in the preceding quarter. Operating margin was 18.2%, up 80 basis points.
5
What is HCLTech’s revised annual revenue growth guidance?⌵HCLTech narrowed its annual revenue growth forecast to 2.5%–4%, compared with its previous range of 1%–4%.
The rise of AI has shaken India's IT services industry, forcing firms to overhaul their business model and offer steep discounts. Despite AI unlocking newer revenue streams, it is shrinking traditional revenue as clients are increasingly tying fees to performance outcomes instead of hours worked.
Last week, Tata Consultancy Services Ltd.'s revenue was in line with estimates and total deal wins dropped. However, the acceleration in AI revenue lifted the stock by as much as 6.2% on Friday.
New deal wins for the quarter stood at $3.26 billion, up from $2.4 billion in the preceding quarter and $2.57 billion in the same period last year. The current quarter's figure includes $1.14 billion Mercedes Benz contract.
The company reported an operating margin of 18.2%, up 80 basis points.
The company announced partnership with Anthropic ahead of earnings, saying that it will set up a dedicated business unit to build AI agents and accelerate Claude adoption.
On Monday, HCLTech shares rose 0.52% to ₹1,223.00 apiece on the NSE even as the Nifty IT index ended the day 1.1% lower.
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