HCL Technologies Q4 Preview: Revenue steady, but margin pressure likely to weigh on earnings

HCL Tech Q4FY26 Result Preview: HCL Technologies will announce its March quarter results on April 20, and going by early estimates, the numbers may not throw up too many surprises. Growth looks steady on the surface, but there are signs that margins could come under some strain.

Revenue likely to be lower

The Zee Business Research Team expects the company to report revenue of about $3.67 billion for the quarter, which would be lower by around 3 per cent compared to the previous quarter. In rupee terms, however, revenue is likely to inch up 1.7 per cent to about Rs 34,462 crore, helped in part by currency movement.

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Profitability may be a bit softer this time. EBIT is seen at roughly Rs 6,164 crore, down 1.9 per cent on a sequential basis. Margins are also expected to slip to 17.9 per cent from 18.6 per cent in the December quarter, pointing to cost pressures that haven’t quite eased.

Adjusted profit is pegged at around Rs 4,721 crore, a decline of about 1.5 per cent quarter-on-quarter. This number factors in labour-related costs after tax. The comparison is not entirely like-for-like, since the reported profit in the previous quarter stood at Rs 4,082 crore.

Deal wins might see improvement

One area that continues to hold up is deal wins. Total contract value for the quarter is estimated at around $2.5 billion, suggesting that client engagement remains steady even if near-term revenue growth is uneven.

That said, the March quarter is seasonally a weaker one for IT companies, and that seems to be playing out here as well. While the core IT services business is expected to support revenues, softness in other segments and typical year-end slowdown could offset some of the gains.

Margins, meanwhile, are facing pressure from multiple sides. A relatively lower contribution from the software business which typically brings in better margins could weigh on the overall number. There may also be some impact from restructuring costs during the quarter.

Currency movement offers some support, as a weaker rupee tends to boost export earnings for IT firms. But that benefit may not fully flow through, as companies usually roll out wage hikes around this time, adding to costs.

Investors will be paying close attention to what the management says about the road ahead. For FY27, revenue growth guidance is expected to come in the range of 3–5 per cent. There is also some expectation that the margin band could be tweaked slightly upwards to 17.5–18.5 per cent.

Beyond the numbers, commentary on demand trends will be key. Client spending in large markets like the US and Europe, will be closely tracked.