HCL Tech Q4 results preview: PAT seen rising 8% YoY; FY26 guidance in focus

IT services company HCL Technologies is likely to see a sequential revenue drop in constant currency terms, in line with other IT peers, mainly due to seasonal weakness in the products business.

Revenue from operations during the fourth quarter will be around 5% year-on-year (YoY), according to an average estimate of six brokerages. Net profit growth in the same period is seen 8% YoY

EBIT margin is likely to decline sequentially, led by lower contribution of software sales; Residual wage hike will have -50 bps QoQ impact.

Analysts believe HCL Technologies will guide for 3-5% revenue growth. Guidance will include a 100 bps contribution from the CTG acquisition. The EBIT margin guidance band is expected around 18-19% and likely to stay unchanged.

Investor focus will be on decision-making slowdown and the impact of macro deterioration on the overall business, new deal TCV that has been fairly modest over the past few quarters, impact to revenues, if any, from the Verizon deal anniversary, revenue growth in the June quarter, a seasonally weak quarter for the company.

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Here’s what analysts expect from HCL Tech Q4

HSBC

Within IT services, growth in BFSI, Hi-Tech and inorganic contribution of HPG CTE will be offset by the ramp-down/offshoring at Verizon and negative impact of foreign exchange.Overall, on a QoQ basis, we expect organic CC decline of 1.7% and c1% decline in USD terms. We expect seasonally lower revenues for the products business, flat QoQ revenue for IT services and modest growth for their ER&D business. We expect op. margins to fall due to the impact of wage hikes, lower software contribution, investments in SG&A but partly offset by favourable INR depreciation.

Key focus areas: Outlook for FY26 and revenue growth guidance. Also, outlook on deal ramp-ups, discretionary spend, and ER&D business will be critical.

ICICI Securities

We build -0.2% USD/+0.2% CC QoQ revenue growth, in-line with QoQ growth implied by full year guidance of 4.5% to 5% for FY25. Q4 will include a 2-month contribution from HPE acquisition of $40 million.

Revenue headwinds in Q4 include large project completion in retail and CPG vertical planned reduction in mega-deal driven work in telecom delay in ramp up of discretionary deals and weak seasonality in products business.

The demand environment is status quo. We expect EBIT margin to decline by 60 bps QoQ led by seasonal weakness in products business and senior management wage hike. Net volumes should increase led by Gen AI automation work.

JM Financial

We estimate 22 bps cross currency headwind for HCL. We are building -0.75%/5.1%/-14% QoQ growth in IT Services/ERS/ Product and Platform business in USD terms. We have built $50 million contribution from CTG (part of ERS), which implies an incremental contribution of $32 million (90bps QoQ).

Nuvama Equities

Revenue shall report revenue decline of -0.7% QoQ in CC and -1.3% QoQ in USD – driven by Services (+0.5% QoQ) and P&P (-15% QoQ). Services business will be boosted by two months of inorganic contribution (HPE, 1%).

EBIT margin to fall 170 bps QoQ due to P&P seasonality. We expect HCLT to guide FY26 revenue growth (3-5% CC YoY growth in Services) and margin (18- 19%).

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