HCL Technologies Q1 FY27 Results (NSE: HCLTECH)
Signal: Steady quarter
The read
Q1FY27 marks a deceleration in revenue growth from +12.3% in Q4FY26 to +13.9% now (still above the 1-4% FY27 organic guidance); EBIT margin at 17.9% is 60bps below the 18.5% upper bound of FY27 guidance, but the YoY PAT beat (+20.3%) is aided by lower tax and finance costs, not operating leverage. IT and Business Services remains the engine; standalone divergence largely a one-off from prior BAPA settlement.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹34,579 Cr | 13.9% | 1.8% |
| EBIT | ₹6,192 Cr | 14.7% | |
| Net profit | ₹4,624 Cr | 20.3% | |
| EPS | ₹17.09 | 20.5% | |
| EBIT margin | 17.9% |
P&L walk
Revenue grew 13.9% YoY; EBITDA margin contracted 20bps YoY to 17.9% as employee cost grew 11.9% (slower than revenue) but outsourcing cost jumped 23.4% YoY; EBIT margin stable QoQ; PAT up 20.3% YoY aided by lower tax rate (24.3% vs 25.9% YoY).
Segments
IT and Business Services was the primary growth driver with revenue +16.0% YoY and segment profit +30.3% YoY; HCL Software profit fell 17.2% YoY; Engineering and R&D services profit was flat (-3.0% YoY).
Key positives
- Consolidated revenue ₹34,579 Cr, +13.9% YoY, above the FY27 organic guidance range of 1-4%.
- IT and Business Services segment profit grew 30.3% YoY, margin expanded ~190bps to 17.0%.
- Net profit ₹4,624 Cr, +20.3% YoY, thanks to lower tax (24.3% vs 25.9%) and finance costs (-59.8%).
- EBIT margin at 17.9% is near the lower end of guidance but improved QoQ (+130bps).
Key concerns
- Revenue growth decelerated sequentially (+1.8% QoQ) from +4.4% QoQ in Q4FY26.
- EBIT margin at 17.9% is below the 18.5% upper bound of FY27 EBIT margin guidance (17.5-18.5%).
- Outsourcing costs jumped 23.4% YoY, outpacing revenue growth — cost pressures in third-party contracts.
- HCL Software segment profit fell 17.2% YoY despite +4.4% revenue growth — margin compression.
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