Informist, Monday, Jul. 14, 2025

Anand JC and Rajesh Gajra

NEW DELHI – The earnings performance of HCL Technologies Ltd. in the June quarter was not only weak as compared to the previous quarter but the net profit came below analysts' expectation while the top line barely met the market view. The net profit fell sequentially for the second consecutive quarter and the revenue growth was at a four-quarter low.

The large technology firm's consolidated net profit fell 11% on quarter to INR 38.43 billion. It was below the Street's estimate of INR 42.29 billion. The consolidated revenue from operations recorded a small 0.3% sequential increase to INR 303.49 billion. The revenue was slightly above analysts' estimate of INR 303.20 billion. The revenue in constant currency terms was down 0.8% sequentially.

Its top line for the latest quarter fell 0.8% from the March quarter but grew 3.7% on year. HCL Tech earned a revenue of $3.55 billion in the June quarter, up 1.3% sequentially. Revenue from services operations declined 0.1% sequentially in constant currency terms, but grew 4.5% on year. Its digital revenue, which contributed around 42% to its services business, grew 15.2% on year in constant currency terms in the June quarter.

The company's top line from its information technology and business services business for the June quarter was INR 224.54 billion, just a percent higher sequentially. Revenue from engineering and research and development services for the latest quarter stood at INR 51.74 billion, a tad higher sequentially. Revenue from HCLSoftware in constant currency terms fell to INR 27.21 billion from INR 28.98 billion a quarter ago. In constant currency terms, top line from this business fell 3% on year.

Its earnings before interest and tax for the June quarter fell to INR 49.42 billion from INR 54.42 billion in the March quarter, registering a fall of 9.2% sequentially but still up 3.1% on year. HCL Technology's EBIT margin for the June quarter stood at 16.3%, lower than the 18% in the March quarter and 17.1% in the base quarter.

HCL Technology expects its EBIT margin for 2025-26 (Apr-Mar) to be 17-18%, lower than its guidance of 18-19% margin provided in April. The tech major also expects its company revenue and services revenue to grow 3-5% year-on-year in constant currency terms for the ongoing financial year. In April, it had forecast company revenue and services revenue to grow 2-5% on year in FY26.

The EBIT margin from the technology and business services operations for the June quarter was 15.1%, down 183 basis points sequentially and 150 bps on year. Meanwhile, engineering segment's EBIT margin was 17.7%, down 19 bps on quarter but up 102 bps on year.

The EBIT margin of the services business was 15.6% for the June quarter, down 152 bps from the March quarter and 103 bps from the year-ago quarter. HCLSoftware's EBIT margin was 22.4%, compared to 24.3% in the March quarter.

New deal wins registered by the company during the June quarter were $1.81 billion, much lower than the orders worth $3 billion booked in the March quarter. "Our pipeline continues to grow as the demand environment was stable during the quarter," HCL Tech's Chief Executive Officer and Managing Director C. Vijayakumar said in a press release.

The company recorded an attrition rate of 12.8% in the quarter ended June, on a par with the year-ago quarter. HCL Tech reduced 269 employees last quarter to take the overall people count to 223,151. In contrast, the company had added 2,134 and 2,665 personnel in December and March quarters, respectively. The company also added 1,984 freshers in the latest quarter.

SERVICES SALES MIX
HCL Tech's services revenue from the US, which contributes around 57% to overall revenue, grew 0.5% on year in constant currency terms. Europe, which contributes just over 28% to overall sales, saw services revenue growth of 9.6% on year in constant currency terms. In India, services revenue grew only 1.3% on year in constant currency terms. India contributes a little more than 3% to HCL Tech's overall services revenue mix. Rest of the world, forming nearly 12% of its overall sales mix, saw a growth of 15% on year in constant currency terms.

Revenue from financial services grew 6.8% on year in constant currency terms during the June quarter, but manufacturing contracted 1%. Together, these two contribute around 40% of HCL Tech's overall sales mix in terms of verticals.

Lifesciences and healthcare vertical's revenue contracted 4% on year in constant currency terms, but the vertical comprising telecommunications, media, publishing and entertainment services grew 13% on year.

HCL Tech's board has approved paying an interim dividend of INR 12 per share, with the record date being Friday. Monday, shares of HCL Tech closed 1.1% lower on the National Stock Exchange at INR 1,619.80. End

US$1 = INR 85.99

Edited by Deepshikha Bhardwaj

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