
HCLTech Q1 FY26 profit fall by 10%, revenue up YoY
HCL Technologies, one of the largest Indian IT companies, has reported a decline in net profit for the quarter ending June 30, 2022 (Q1 FY26). Despite the profit drop, the company saw a year-over-year (YoY) revenue growth, driven by strong deal wins and stable clients. In this blog post, we will delve into the key highlights of HCLTech’s Q1 FY26 performance and what it means for the company’s future prospects.
Financial Performance
HCLTech posted a net profit of ₹3,843 crore for Q1 FY26, which is a decline of 10.8 percent from the previous quarter (Q4 FY25). This drop is due to various factors, including higher operating expenses and a temporary increase in employee costs. On a YoY basis, the net profit decline is slightly more pronounced, at 12.3 percent.
However, revenue growth was a different story. HCLTech’s total revenue for Q1 FY26 stood at ₹25,314 crore, representing a YoY growth of 3.7 percent. This growth is mainly driven by a 4.5 percent increase in services revenue in constant currency terms.
Segment-wise Performance
HCLTech’s services segment, which accounts for the majority of its revenue, saw a strong performance. Services revenue grew 4.5 percent YoY in constant currency terms, driven by deals in the areas of digital, cloud, and artificial intelligence (AI). The company’s engineering and R&D services segment also showed growth, with a 5.4 percent YoY increase in revenue.
Attrition and Hiring
HCLTech’s attrition rate, a key metric for IT companies, dropped to 12.8 percent in Q1 FY26. This is a significant improvement from the previous quarter’s rate of 14.2 percent. The company’s efforts to improve employee engagement and retention seem to be paying off.
In terms of hiring, HCLTech added 1,984 freshers to its workforce in Q1 FY26, taking the total headcount to 211,444. The company’s strong deal wins and stable clients have enabled it to maintain a healthy cash position, with net cash of ₹27,343 crore.
Deal Wins and Client Base
HCLTech’s strong deal wins during the quarter are a key highlight. The company added several significant deals, including a five-year engagement with a leading European bank to transform its core banking platform. HCLTech also expanded its partnership with a global healthcare company to provide digital transformation services.
The company’s stable client base is another key strength. HCLTech has a diverse portfolio of clients across various industries, including banking, healthcare, manufacturing, and retail. The company’s ability to maintain strong relationships with its clients has enabled it to win repeat business and expand its scope of work.
Conclusion
HCLTech’s Q1 FY26 performance is a mixed bag. While the company’s revenue growth is encouraging, the decline in net profit is a concern. However, the company’s strong deal wins, stable clients, and healthy cash position underline its resilience.
In the current economic environment, IT companies are facing challenges due to macroeconomic uncertainty, talent shortages, and rising costs. However, HCLTech’s performance suggests that it is well-positioned to navigate these challenges and continue to deliver growth.
As the company looks ahead to the remainder of FY26, it will be important to keep a close eye on its operating expenses and employee costs. If HCLTech can manage these costs effectively, it is likely to continue to deliver strong revenue growth and improve its profitability.
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