HCLTech improves revenue but keeps a cautious outlook

what happened

Newsmetry API, citing Ranjit Shinde of ET Intelligence Group, reports that HCL Technologies (HCLTech) increased revenue by 2% to $3,724 million in the September quarter, following two consecutive quarters of decline. Growth was supported by ramp-ups in existing deals and contributions from acquired businesses. New contract wins reached $3,258 million, the highest level since the September 2023 quarter, when the company announced deals worth $3,969 million. Headcount rose by 6,450, the largest sequential addition in 16 quarters.

HCLTech did not raise its full-year revenue guidance, instead narrowing the constant-currency growth range to 2.5-4% from 1-4%. The operating margin range was unchanged at 17.5-18.5%. Management said the effect of AI on revenue, described as “AI deflation,” was still present. At the same time, HCLTech and Tata Consultancy Services (TCS) reported traction in AI-generated revenue: $876 million on an annualised basis for HCLTech and more than $3.1 billion for TCS. AI revenue represented 6% and 10% of their respective revenue.

HCLTech shares have traded within a range over the past three months, reversing their early gains as AI concerns and broader market weakness increased. Business momentum in the second half of the fiscal year may be affected by holiday-related seasonality and clients’ annual IT-budget decisions, although ramp-ups in recently won large projects could provide some offset.

why it matters

The update points to improving bookings alongside continued caution. Markets are likely to focus on whether AI-related revenue can offset pressure on traditional IT services and the seasonal slowdown expected in the second half of the fiscal year.

instruments