Synopsis: A leading IT services major delivered a steady first quarter with double-digit revenue and profit growth, even as its Advanced AI business more than doubled year-on-year. Record bookings and margin expansion point to continued momentum heading into the rest of FY27.
The company showcased a robust performance in the first quarter of the financial year, achieving double-digit growth in revenue and profitability on a consolidated basis. This quarter also set a record for first-quarter bookings, highlighting strong enterprise demand despite a cautious spending climate.
With a market capitalization of Rs. 3,21,189 crore, the shares of HCL Technologies Limited were trading at Rs. 1,184 per share, with a 52-week range of Rs. 1,780 to Rs. 1,030, and they are trading at a P/E of approximately 18x.
Strong Q1 FY27 Performance
On a consolidated basis, revenue from operations for the quarter came in at ₹34,579 crore, up 13.9% year-on-year from ₹30,349 crore in the same quarter last year, and higher than the ₹33,981 crore reported in the preceding March quarter. In constant currency terms, revenue grew 2.6% year-on-year, though it declined marginally by 0.5% sequentially.
Net profit attributable to owners of the company stood at ₹4,624 crore, up a sharp 20.3% year-on-year from ₹3,843 crore, and higher than the ₹4,488 crore posted in the previous quarter. EBIT for the quarter came in at ₹5,831 crore, translating into an EBIT margin of 16.9%, an improvement of 56 basis points year-on-year and 39 basis points sequentially. It’s worth noting that this margin includes a 62 basis point impact from restructuring costs during the quarter; excluding this one-off, the underlying margin would have been meaningfully stronger.
Diluted earnings per share on a trailing twelve-month basis rose to ₹66.90, compared to ₹62.57 a year earlier. The HCL Tech board also declared an interim dividend of ₹12 per share, with a record date of July 17, 2026, and a payment date of July 27, 2026.
Highest-Ever Q1 Deal Wins
One of the standout numbers for the quarter was on the bookings front. HCL Technologies reported net-new deal wins worth $2,407 million, its highest-ever first-quarter bookings figure, a sign that enterprises continue to commit to large-scale technology transformation programs despite ongoing macro uncertainty. This was reflected across verticals, with wins spanning cybersecurity, SAP transformation, infrastructure modernization, and AI-led operating models for clients across the US, Europe, and other geographies.
AI Business Is Scaling Rapidly
HCL Technologies’ Advanced AI business continued its rapid ascent during the quarter, generating revenue of $171 million, up 10.6% quarter-on-quarter and a striking 62.1% year-on-year in constant currency terms. This growth was supported by a string of large AI-led deals during the quarter, including an AI data center buildout program worth over $180 million in incremental scope, as well as multiple engagements around physical AI, agentic automation, and AI-driven application development. Management pointed to this as clear evidence that enterprises are increasingly choosing the company to lead their AI transformation journeys.
Margin Expansion Despite Restructuring Costs
Segment-wise, the IT and Business Services vertical, HCL Technologies largest, reported an EBIT margin of 17.0%, up 184 basis points year-on-year. The Engineering and R&D Services segment posted a margin of 15.6%, while HCLSoftware came in at 17.6%, though the software segment saw a year-on-year revenue decline of 5.3% in constant currency.
Cash generation also remained robust during the quarter. Free cash flow for the quarter stood at $278 million (₹2,623 crore equivalent), reflecting a robust free-cash-flow-to-net-income ratio of 99% on a Trailing Twelve Months (LTM) basis, while the OCF-to-net-income ratio reached 111%. Return on invested capital came in at 40.7% on an LTM basis, up 257 basis points year-on-year, reflecting continued improvement in capital efficiency.
Management Sees Further Growth
Commenting on the quarter, HCL Technologies CEO highlighted that the combination of record bookings and rapid AI business growth, along with visible margin expansion, gives management confidence in outpacing the broader market over the medium term. The CFO added that excluding restructuring costs, EBIT margin and net income margin would have stood at 17.5% and 13.8%, respectively, further underlining the underlying strength of the business.
Looking ahead, the company reiterated its FY27 guidance, expecting overall revenue growth of 1.0% to 4.0% in constant currency terms, with the services business projected to grow between 1.5% and 4.5%
Investor Outlook
HCLTech’s Q1 shows healthy execution, strong profit growth, record bookings, and a fast-scaling AI business to support a constructive medium-term view. However, constant currency revenue growth remains modest, and softness in HCLSoftware and telecom verticals warrants monitoring. Strong cash conversion and capital efficiency are reassuring positives. With guidance reiterated rather than raised, the stock’s near-term re-rating likely hinges on constant currency growth accelerating in the coming quarters.
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