HCLTECH REPORTED REVENUE OF US$3,498 MN, DOWN 1% QOQ

News: HCLTech reported revenue of US$3,498 mn, down 1% QoQ & up 2% YoY (in CC terms down 0.8% QoQ/ up 2.9% YoY). The services business improved 0.7% QoQ/2.7% YoY in CC terms. The growth this quarter in CC terms on a QoQ basis was led by the ER&D services which improved by 5.5%. Whereas, the IT services and Software business declined by 0.3% and 13%. Geography wise all geographies grew on a YoY basis in CC terms with ROW (7% of mix), Europe (29.2% of mix) and Americas (64% of mix), reported a growth of 23.2%, 4.3% and 0.1% respectively. Segment wise on YoY basis in CC terms, growth was led by TMPE (14% of the mix), Tech & Services (13.4% of the mix), Retail & CPG (9.7% of the mix), and Financial Services (21.1% of the mix) which grew by 24.3%,10.8%, 9.5%, and 0.7% respectively. Whereas, Life Sciences & Healthcare (15% of the mix), Manufacturing (18.6% of the mix) and Public Services (8.6% of the mix) declined by 7.4%, 6.1% and 0.5%.  EBIT margins at the company level stood at 18%, down ~160 bps QoQ primarily on account of seasonality in the software business (-124 bps). The IT Services margin stood at 17.1%, down ~38 bps QoQ due to second cycle of increments in the quarter (-50 bps) and the balance drop was contributed by investments in the sales and marketing initiatives which was partially offset by forex gains of (+46 bps) and project Ascent benefits. HCLTech during the quarter won a strong TCV of US$3 bn (up 43% QoQ & up 31% YoY). For FY25, the revenue stood at US$13,840 mn, up 4.3% YoY (up 4.7% in CC terms). In rupee terms, the revenues stood at ₹117,055 crore, up 6.5% YoY. EBIT margin for FY25, stood at 18.3%, marginally up on a QoQ basis.

View: HCL Tech reported a soft Q4, largely due to the seasonal nature of its software business. The company achieved record net new bookings of US$3 billion in Q4, with FY25 total TCV reaching $9.4 billion (with ER&D being a key driver). Moreover, they noted no deal cancellations, barring shelving of one large deal, and flagged a potential uptick in fresher hiring amid strong pipeline visibility. While macro pressures and subdued discretionary spending, especially in retail and manufacturing (auto), could pose near-term headwinds, management remains cautiously optimistic, guiding for 2–5% revenue growth (organic growth of 1-4%) and 18–19% EBIT margins in FY26, with lower band of revenue guidance reflecting weak scenario while upper band being current steady state. HCL Tech performance, albeit soft, was better than expected and guidance was largely on expected lines.

Impact: Neutral