HCL Tech shares fall ahead of Q1 earnings, here's what to expect

Shares of HCL Technologies slipped 1.5% in early deals ahead of the IT firm's Q1 earnings set to be announced today. The stock fell 1.55% to Rs 1611.90 on BSE. Market cap of the firm stood at Rs 4.39 lakh crore. Major domestic IT firms including HCL Technologies derive a majority of their revenue from the US and European regions. Macroeconomic uncertainties, including Donald Trump’s tariffs and rising trade tensions ar likely to affect earnings of these  firms. 

During the earnings today, key things to watch out for are demand outlook for ER&D services, P&P, business application, IMS and digital services in FY26E. 

Also, the impact from ongoing macro issues on HCLT growth/margin outlook or on its clients, if any. Any update on the acquisition strategy in the medium term, capital allocation policy and deal pipeline/wins are also key monitorables in the earnings today.

Brokerage Equirus expects dollar revenue growth of 1.4% qoq (CC qoq fall of 0.9% due to seasonal weakness in IT Services and P&P business). Constant currency (CC) dip of 0.9% q-o-q is expected in  services. 

EBIT margins are likely to fall by 77 bps q-o-q led by seasonal weakness. "We expect no change in HCLT CC US$ Sales growth guidance of 2-5% (c.1-4% organic) both for services & consoliadted business for FY26E. We also do not expect any change in its Consolidated EBITM guidance of 18-19% for FY26E," said Equirus. 

Profit growth is seen flat at 0.4% to Rs 4275.1 crore in the last quarter against Rs 4,257 crore on a year on year basis. Profit is likely to fall 0.7% from Rs 4,307 crore in the March 2025 quarter. 

Equirus sees revenue rising 5.4% to $3547 mn against $3364 mn in the June 2024 quarter. 

Axis Securities expects HCL Tech to report revenue growth of 0.3% QoQ on account of weak service business. Operating margin is expected to contract by 44bps in Q1. Key factors to watch out for are a) Deal TCV/deal pipeline, b) Discretionary spends, and c) Outlook on ER&D and Service business.  HCL Tech  is among Axis' top picks for result positive plays. 

Revenues are likely to rise 8.1% to Rs 30,325 crore in Q1 from Rs 28,057 crore in the June 2024 quarter, accridn to Axis. It sees a 2.6% rise in revenue from Rs 40,925 crore in the March 2025 quarter. 

Profit may come at Rs 4279 crore in Q1, rising 0.5% from Rs 4259 crore in June 2024 quarter and falling  0.7% from Rs  4309 crore in the March 2025 quarter. 

EBIT margin is seen rising by 46 bps to 17.5% in Q1 against 17.1% in June 2025 quarter and falling 44 bps from 18% in the March 2025 quarter. 

Choice Broking expects HCL Technologies to log a muted Q1FY26 performance. Constant currency revenue is likely to fall by 0.7% sequentially. However, a favourable cross-currency movement—estimated at 200 basis points—is likely to lift USD-reported revenue by around 1.3% quarter-on-quarter.

BFSI (banking, financial services, and insurance) vertical is likely to outperform other segments such as manufacturing, retail, and telecom, while the engineering and R&D (ER&D) business can see some softness. Choice sees margins to remain largely stable, with EBIT margins likely to fall by 10 basis points to 17.8%, primarily due to subdued revenue growth.

The stock is neither overbought nor oversold on charts indicates its relative strength index (RSI) at 37.3. The stock is trading below all its short term and long term moving averages. Meanwhile, the Nifty IT index 489 points to 37,204 with Infosys (1.5%) and TCS (1.11%) being the top losers in late morning deals.