HCLTech's Q1 FY26 Performance

HCLTech, India’s third-largest IT services firm, reported a 10.8% sequential decline in net profit to ₹3,843 crore for the April-June quarter, missing Bloomberg estimates. Revenue remained nearly flat at ₹30,349 crore. Operating margin dipped sharply to 16.3%, the weakest in six years, due to lower employee utilisation, AI investments, and a one-time client impact. The company cited partial deployment of resources hired for a large March deal and a skills gap leading to higher bench strength. A client bankruptcy also dented margins by 20 bps. In response, HCLTech cut its full-year operating margin guidance from 18–19% to 17–18% and announced restructuring plans, including rightsizing underutilised facilities. Despite margin pressures, HCLTech raised the lower end of its FY26 revenue growth guidance to 3–5%. The tech and telecom verticals showed strong YoY growth, while manufacturing lagged. Nuvama downgraded the stock to 'Hold' citing weak results and limited valuation upside, noting that EPS growth is expected to be minimal in FY26.