Street estimates suggest revenue growth of about 14% YoY, based on an average of seven brokerages, while profit after tax is likely to rise around 9% YoY. However, the sequential performance is expected to be softer, with most analysts building in a decline in constant currency (CC) revenue for the quarter.
Brokerages including Emkay, Jefferies, JM Financial and Kotak Institutional Equities broadly expect a 0.8% to 1.7% decline in CC revenues on a quarter-on-quarter basis. This is largely attributed to the typical seasonality in HCL Tech‘s high-margin software business, which tends to see a sharp drop in the March quarter after a strong December period.
Jefferies estimates a 1.6% QoQ CC revenue decline, led by a steep 22% sequential fall in the software segment, partially offset by modest growth of around 1% in the services business. Similarly, Motilal Oswal expects overall revenue to decline about 0.9% QoQ CC, again dragged by a roughly 23% drop in product revenues.
Despite this, the services segment, which forms the core of HCL Tech’s business, is expected to remain resilient. Most brokerages are building in 1-1.5% sequential growth in IT services and ER&D, supported by steady deal ramp-ups and stable demand in key verticals such as BFSI and high-tech.
Margins, however, are likely to come under pressure. Analysts expect EBIT margins to contract by 130 to 160 basis points sequentially due to a combination of factors including software seasonality, wage revisions, and restructuring charges. Kotak estimates reported EBIT margin at around 17.7%, with underlying margins closer to 18.5%, while Emkay and Jefferies see similar levels of compression.
Currency tailwinds from rupee depreciation are expected to provide some cushion, but not enough to fully offset the impact of cost pressures and seasonal decline in high-margin segments.The deal pipeline remains a key support factor. JM Financial expects order inflows in the range of $2.2-2.5 billion for the quarter, while Kotak also sees total contract value (TCV) in a similar range, indicating continued traction in large deal wins.
Analysts note that execution of these deals, along with ramp-ups from recent mega contracts, will be critical for near-term growth visibility.
The management commentary on FY27 guidance will be closely tracked. Most brokerages expect HCLTech to guide for 3–6% constant currency revenue growth for FY27, with EBIT margin guidance likely in the range of 17.5–18.5%. This would mark a modest improvement in margin outlook compared to the previous band, supported by operating efficiencies and favourable currency movements.
Investors will also look for clarity on the demand environment, particularly in the context of global macro uncertainties and geopolitical tensions. Any commentary on IT budgets for CY26, discretionary spending trends, and pace of decision-making among clients will be closely scrutinised.
Another key focus area will be the impact of artificial intelligence on the company’s business model. Analysts expect updates on HCL Tech’s AI Force platform, progress in monetising AI-led offerings, and how the company plans to offset potential revenue deflation from productivity gains driven by automation.
Sectorally, BFSI and technology verticals are expected to remain relatively stable, while manufacturing and ER&D segments could see some pressure. Pricing trends, vendor consolidation deals, and cost takeout opportunities are also likely to feature in investor discussions.
In addition, updates on recent acquisitions, including the integration and expected synergies from HPE’s telecom solutions business and Jaspersoft, will be important for assessing medium-term growth drivers.
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