HCLTech increases revenue growth guidance, cuts EBIT margin expectations by 100 bps for FY26; check details

HCL Technologies on Monday, July 14, set its revenue growth expectations for the 2025-26 financial year (FY26) between 3% and 5% year-on-year (YoY) in constant currency (CC) terms, increasing it from the previous range of 2% to 5% for the current fiscal quarter, predicted in the last quarter.

The tech company anticipates its service sector revenue to grow in the range of 3% to 5% YoY, as against its earlier guidance of 2%-5% YoY.

However, HCLTech cut its EBIT margin (earnings before interest and taxes) guidance by 100 basis points to 17-18% YoY in FY26 from its previous forecast of 18% to 19% YoY.

The company increased its revenue guidance for the fiscal year following healthy topline growth of 3.7% YoY during the quarter under review. It was bolstered by good performance in the services sector, which saw a 4.5% YoY growth in constant currency terms, C. Vijayakumar, HCLTech’s CEO and MD, said in a statement.

“Our operating margin came at 16.3%, impacted by lower utilisation and additional Gen AI and GTM investments. Our AI propositions are resonating well with our clients and have been augmented further by our partnership with OpenAI,” he stated.

The company’s pipeline continues to grow as the demand environment was stable during the quarter, Vijayakumar added.

“As the only service provider positioned as 'Customer's Choice’ in all 6 Gartner Voice of Customer Quadrant evaluations related to IT services, we are well-positioned to grow in the AI era,” he said.

Service sector revenue mix

HCLTech generated 56.5% of its service revenue from the US in the first quarter of FY26, compared to 57.4% in the preceding quarter and 59.6% in the year-ago period. Its revenue from the US increased less than marginally at 0.5% YoY in CC terms.

Europe contributed 28.3% to the company’s services topline at 28.3% in Q1FY26, as against 27.5% in the previous period and 25.9% in the corresponding quarter last year. Its revenue from the European market surged 9.6% YoY (CC terms).

India made up 3.3% of its service revenue mix in the quarter under review, in contrast to 3.1% in Q4FY25 and 3.5% in the June FY25 quarter. Its revenue from its home country grew 1.3% YoY in CC terms.

Furthermore, the tech firm earned 11.9% of its service revenue from the rest of the world in the June FY26 quarter, compared to 12% in the previous quarter and 11% in Q1FY25. Its revenue from the rest of the world soared 15% YoY in the quarter under review.

In terms of verticals, financial services were the highest contributing sector to the company’s services revenue at 21.6% in the quarter ended June 30, 2025. Revenue from financial services grew 6.8% YoY in CC terms. However, its second biggest contributor, the manufacturing vertical (generating 18.6% of services revenue), saw a marginal YoY decline in the quarter under review. Revenue from the life sciences and healthcare segment (contributing 14.5% during the quarter) saw a 4% YoY decline.

Key deal wins

During the quarter, HCLTech bagged approximately 27 deals. Here are some of them:

• HCLTech inked a pact with a US-based hospital chain to modernise its IT operations.
• HCL Tech signed a deal with a US-based global payments technology major to accelerate the latter’s digital transformation and enhancement of customer experience across its worldwide operations and product offerings.
• A European telco major selected the tech firm to modernise its technology and operations stack, enabling zero-touch operations through hyper automation powered by GenAI.
• An Asian pubic sector entity responsible for administering the national saving program and affordable shelter financing increased its investment in HCLTech’s Actian’s Ingress, OpenROAD and Enterprise Access products
• New Zealand’s Dunedin City Council selected HCLTech to modernise its IT services, drive digital transformation and improve service delivery.
• The tech firm signed a deal with a leading Australia-based logistics company to modernise and manage its IT infrastructure and transform the digital landscape.
• A global sports body partnered with HCLTech to develop a GenAI-powered commentary enhancement platform aimed at transforming LIVE match broadcasting.
• A Japan-based global leader in imaging, optics and precision equipment selected the UP-based tech firm to develop a GenAI-based recommendation engine for desired camera settings.
• A leading US-based global technology company selected HCLTech to leverage AI to automate key tasks such as image grouping, form classification, metadata extraction, attachment handling and quality checks.
• A global aerospace major partnered with the tech firm to develop a Vision AI solution to optimise the placement of cargo containers within the aircraft.

Shares of HCLTech closed 1.51% lower at ₹1,613.50 apiece on the National Stock Exchange (NSE) on Monday. However, the Q1 results were declared after the market closed.

The tech major has a total market capitalisation of ₹4.38 lakh crore, as of July 14, 2025, as per data on the NSE.