As HCL Technologies prepares to report its Q1 FY26 results on Monday, July 14, analysts predict a soft quarter—typical for the June season—with revenue growth expected in the high single digits year-over-year and minimal sequential improvement. This seasonal slowdown is not unexpected, but macroeconomic uncertainties are adding another layer of complexity to forecasting. Profit forecasts, however, vary considerably, highlighting growing concern around margin pressures and client spending conservatism. The outcome of this quarter will serve as an early indicator of how well HCL is adapting to shifting demand patterns, particularly in discretionary tech budgets and platform-based offerings.
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HCL Revenue Outlook: Solid YoY, Flat QoQ
Analysts project year-over-year revenue growth in the 7–8% range—anchored by healthy deal flow—but see little progress compared to the prior quarter. Seasonal softness in both the services and Products & Platforms (P&P) segments is weighing on expectations.
- Nomura anticipates ₹28,057 cr (＋7.7% YoY, −0.1% QoQ)
- HDFC Securities forecasts ₹30,347 cr (+8.2% YoY, +0.3% QoQ)
- Others like Nuvama and Elara estimate similar ranges between ₹30,200–₹30,400 cr, essentially flat sequentially.
PAT Estimates Show Divergence
Profit After Tax (PAT) estimates reflect varied views, with some forecasting growth and others expecting a small contraction:
- HDFC Securities: ₹4,351 cr (+13.7% YoY, +1.0% QoQ)
- Nuvama: ₹4,312 cr (+1.3% YoY, flat QoQ)
- Prabhudas Lilladher: ₹4,100 cr (−1.7% YoY, +1.7% QoQ)
- Elara Capital: ₹4,154 cr (−2.4% YoY, −3.6% QoQ)
Nomura didn’t share a PAT estimate but noted margin headwinds that could be a key drag.
Margins Under Pressure
EBIT (or EBITDA) margins are expected to decline sequentially, pressured by seasonal productivity resets, wage pass-throughs, and input cost increases. Forecasts suggest margins between 17–17.6%, down 30–90 basis points (bps) quarter-on-quarter, despite year-over-year improvements.
4. Steady Deal Wins Provide Tailwinds
Deal momentum remains encouraging. Nomura puts Q1 deal wins in the $2–2.5 bn range, while Prabhudas Lilladher projects slightly higher ($2.5–3 bn). Analysts view this as a positive signal, showing continued demand for cost optimisation and digital transformation.
5. Guidance: Likely Intact
Investors will watch closely to see if HCL reaffirms its FY26 guidance of 2–5% revenue growth (in constant currency) and 18–19% EBIT margin. Given the deal momentum, most analysts expect the company to maintain this outlook, though commentary on BFSI demand, discretionary IT budgets, and cost-control measures will be scrutinised.
Why This Matters
- Seasonality: The June quarter is historically soft, and this year appears no different.
- Margin Focus: Profitability will be under watch due to cost pressures and seasonal resets.
- Guidance Clarity: Restating outlook will be key amid global macro concerns and tariff uncertainty.
- Deal Vitality: Continued healthy deal wins would underpin confidence, even if short-term numbers wobble.
What to Monitor in the Earnings Call
- Cross-segment commentary — In particular, demand trends in BFSI vs manufacturing.
- Currency impact — Cross-currency tailwinds (200–230bps) could mask underlying softness.
- Discretionary vs essential spending — Signals of appetite for digital budgets.
- GenAI and ER&D traction — Pipeline updates on engineering, R&D, and AI projects.
- Cost metrics — Wage pass-through, utilisation, travel, and other operating costs.
Final Take
HCL is likely to deliver steady year-over-year growth, but this quarter’s seasonal lull may flatten sequential performance across revenue, profit, and margins. Still, robust deal wins and guidance affirmation could steady investor confidence. Focus on management commentary around spending trends and cost management will be crucial to interpret the results. With increasing investor scrutiny on margin trajectory, long-term cost discipline, and tech spending patterns—especially in BFSI and ER&D—HCL’s strategic clarity during the call may determine market sentiment going into the second half of FY26.
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