HCLTech Q1 Results: Restructuring to Impact Q2–Q4, Margins Targeted at 18–19%

HCL Technologies released its Q1 FY26 results on Monday, reporting a decline in profit and margins. The company revised its full-year EBIT margin guidance to 17–18%, down from the earlier 18–19%, after operating margins dropped in the June quarter. This was mainly due to lower employee utilization and higher spending on generative AI and sales expansion efforts.

HCLTech reported a net profit of ₹3,843 crore, down 10.8% from ₹4,307 crore in the previous quarter.
EBIT (Earnings Before Interest and Taxes) also fell to ₹4,942 crore from ₹5,442 crore, with the EBIT margin shrinking to 16.3%, compared to 17.9% last quarter.

In terms of revenue:

• U.S. dollar revenue grew 1.4% to $3,545 million

• Rupee revenue fell slightly by 0.25% to ₹30,349 crore

• In constant currency terms, revenue dipped 0.8%, which was better than the expected 1.1% drop

On a positive note, HCLTech raised the lower end of its FY26 revenue growth forecast from 2–5% to 3–5%, aligning with market expectations.

HCLTech Q1 Results

• EBIT margin fell to 16.3%, down from 17.9% last quarter.

• Margin decline includes a 20 basis point hit from a client bankruptcy.

• Key reasons for the drop: lower employee utilization and increased investments in generative AI and go-to-market strategies.

• HCLTech’s restructuring efforts will continue to impact earnings from Q2 to Q4 to restore margins to 18–19%.

• Management also cited delays in two large deals, expected to close by the end of July.

• The company is optimizing underutilized global facilities and downsizing talent in certain areas, with associated one-time costs already included in FY26 guidance.

🔹 Rallis India Q1 Results (YoY)

• Net Profit: ₹95 Cr (up from ₹48 Cr)

• Revenue: ₹957 Cr (up 22% from ₹783 Cr)

• EBITDA: ₹150 Cr (up 56.3% from ₹96 Cr)

• EBITDA Margin: 15.6% (vs 12.2%)

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