HCLTech Q2 FY27 profit jumps 21% to Rs 5,132cr as AI revenue surges 78%

HCL Technologies Limited (NSE: HCLTECH; BSE: 532281) reported a 21.2% year-on-year increase in consolidated net profit to ₹5,132 crore for the second quarter ended September 30, 2026, supported by stronger IT services performance, improving margins and expanding artificial intelligence revenue. Revenue from operations increased 11.5% to ₹35,620 crore, while earnings before interest and tax (EBIT) reached ₹6,465 crore, lifting the operating margin to 18.2%. The Noida-headquartered technology services company also secured $3.26 billion in new deal bookings and increased the lower end of its FY27 constant-currency revenue growth guidance from 1% to 2.5%. Advanced AI revenue reached $219 million, growing 78% year-on-year in constant currency, highlighting the increasing commercial contribution of enterprise AI services. However, modest underlying revenue growth, weakness in HCLSoftware and changing client spending patterns remain important considerations for the company’s earnings outlook.

The October 12 results showed sequential revenue growth of 3% in rupee terms and 2.3% in constant currency, while net profit increased 11% from the June quarter. Management maintained its FY27 EBIT margin guidance of 17.5% to 18.5%, indicating confidence in profitability despite continuing investment in AI capabilities and business restructuring. The board also declared an interim dividend of ₹12 per share, with October 16 fixed as the record date and payment scheduled for October 26. The results arrived during a period when global IT customers are increasingly prioritising AI-driven efficiency, automation and measurable business outcomes over traditional technology spending.

Why did HCLTech’s Q2 FY27 profit grow faster than revenue despite moderate underlying demand?

HCL Technologies delivered a stronger earnings performance than its headline constant-currency revenue growth might suggest. Consolidated revenue increased from ₹31,942 crore in Q2 FY26 to ₹35,620 crore in Q2 FY27, while net profit rose from ₹4,235 crore to ₹5,132 crore. Operating profit increased from ₹5,550 crore to ₹6,465 crore, with EBIT margin improving by 71 basis points year-on-year and 131 basis points sequentially. The margin expansion indicates that cost management, operating efficiency and business composition supported profitability even as client demand remained uneven.

The distinction between reported rupee growth and constant-currency performance is particularly relevant. Although revenue increased 11.5% in Indian rupees, constant-currency growth was only 2.6% year-on-year, reflecting a substantially more modest underlying expansion. Currency movements and other reporting effects therefore account for an important part of the difference between the two growth measures. Investors evaluating the sustainability of growth should focus on constant-currency trends alongside reported earnings rather than assuming that double-digit rupee revenue growth represents equivalent expansion in client demand.

The September-quarter operating margin also includes restructuring expenditure equivalent to 84 basis points of revenue. Excluding that impact would indicate a higher underlying margin, although restructuring costs are real expenses and should not be ignored when assessing reported profitability. Management’s ability to expand margins while absorbing these costs is encouraging, but subsequent quarters will need to establish whether the improvement is sustainable as AI investments and workforce requirements evolve.

How significant is HCLTech’s $3.26 billion deal pipeline for its FY27 revenue outlook?

HCLTech reported new contract bookings worth $3.258 billion during the September quarter, an increase of approximately 27% from the corresponding period last year. The company secured agreements across financial services, manufacturing, retail, healthcare and enterprise technology, including AI-led application modernisation and infrastructure transformation. Reuters reported that the total included a $1.14 billion contract with Mercedes-Benz, making it a substantial contributor to the quarter’s announced bookings. However, contract bookings represent future business commitments rather than revenue immediately recognised in the reporting period.

The company’s services division delivered 4% year-on-year constant-currency growth, supported by a 4.4% increase in IT and Business Services and 2.1% growth in Engineering and Research and Development Services. Financial services remained an important source of demand, growing 7.1%, while retail and consumer packaged goods increased 14%. Lifesciences and healthcare declined 2.1%, demonstrating that enterprise technology spending remains uneven across industries.

Management raised its FY27 company-wide revenue growth forecast to 2.5% to 4% in constant currency, compared with the previous 1% to 4% range. Services revenue is now expected to grow between 3% and 4%, narrowing the previous 1.5% to 4.5% forecast. The revision signals improved visibility but not an acceleration across every business segment. Converting the substantial deal pipeline into revenue while maintaining margins will remain central to achieving the revised outlook.

Can HCLTech’s 78% AI revenue growth become a meaningful driver of future earnings?

Advanced AI revenue increased to $219 million during Q2 FY27, compared with $171 million in the preceding quarter. The company reported growth of 28.4% sequentially and 78% year-on-year in constant currency, reflecting increasing demand for enterprise AI deployment, automation and engineering capabilities. Against quarterly consolidated dollar revenue of $3.724 billion, the reported AI figure represents approximately 5.9%, although it should not be treated as an independently reported operating segment. The current scale is meaningful, but most company revenue still comes from broader technology services and software activities.

The company strengthened its AI strategy on October 12 through a Global Premier Partnership with Anthropic. Under the arrangement, HCL Technologies will establish a dedicated Anthropic Business Unit and Center of Excellence focused on enterprise adoption of Claude, Claude Code and other agentic AI capabilities. HCLSoftware will also integrate selected Anthropic technologies into enterprise products, potentially extending the partnership beyond consulting and implementation services.

This expansion comes as enterprise customers increasingly evaluate technology suppliers on measurable productivity improvements rather than the number of engineering hours provided. AI automation can create new consulting, deployment and governance opportunities while potentially reducing demand for certain traditional services. HCLTech’s ability to generate recurring revenue from AI-enabled operations, rather than relying exclusively on initial implementation projects, will influence the profitability of this transition. The company has disclosed strong AI revenue growth, but it has not established a separate profitability margin for its advanced AI activities.

Why is HCLSoftware revenue declining despite growth in recurring software contracts?

HCLSoftware remained the weakest major business segment during the September quarter, recording an 11.2% year-on-year revenue decline in constant currency. Its contribution to consolidated revenue stood at approximately 7.9%, compared with a larger share a year earlier. The segment generated $294 million in quarterly revenue, down from $333 million in September 2025. Its EBIT margin stood at 20.1%, compared with 26.5% in the previous-year quarter.

However, the segment’s annual recurring revenue reached $1.134 billion, representing 7.8% year-on-year constant-currency growth. This suggests that the underlying subscription and support contract base is developing more favourably than quarterly recognised revenue. Upfront licence income, contract timing and the composition of software revenue can create differences between recognised sales and annualised recurring commitments. The recurring revenue measure is not a guaranteed forecast of future reported revenue.

The challenge for HCL Technologies is converting that growing recurring base into consistent quarterly performance. The recently completed Jaspersoft acquisition and Anthropic partnership could broaden the software portfolio, although both require effective commercial integration. A recovery in HCLSoftware’s recognised revenue would reduce the contrast between strong services growth and weakness in the smaller software division.

What do HCLTech’s hiring figures and cash position reveal about its operating strategy?

HCLTech ended September 2026 with 230,339 employees, representing a net quarterly addition of 6,450 people after a reduction of 3,292 in the June quarter. The company added 6,136 freshers during Q2, while last-twelve-month attrition increased slightly to 12.8% from 12.7% in June. Revenue per employee stood at $65,400 on an annualised basis, marginally below the previous quarter but 2.4% higher year-on-year. These figures indicate that workforce capacity is expanding alongside new contract opportunities, although headcount movements should not automatically be attributed entirely to organic hiring.

The company’s financial position provides additional flexibility for investment and shareholder distributions. Net cash stood at ₹24,503 crore at the end of September, while quarterly operating cash flow reached ₹4,758 crore and free cash flow amounted to ₹4,128 crore. HCLTech also reported payments of ₹3,742 crore for acquisitions during the quarter, demonstrating the scale of capital being deployed beyond ordinary operations. Maintaining cash generation while integrating acquired businesses and investing in AI will be important for sustaining returns.

The ₹12 interim dividend reinforces the company’s established shareholder distribution policy. However, the stronger strategic indicator is its ability to finance new technology capabilities without materially weakening financial flexibility. Management reported a last-twelve-month return on invested capital of 41.2%, up from 38.6% a year earlier on the company’s stated comparable basis. Continued improvement will depend on generating returns from new contracts, acquisitions and technology investments rather than expanding revenue alone.

How did HCLTECH shares react ahead of the results, and what should investors watch next?

HCL Technologies shares closed at ₹1,223 on October 12, gaining approximately 0.52% during the session. The stock’s movement occurred before the post-market earnings announcement, so it cannot be treated as a confirmed reaction to the stronger quarterly profit or revised guidance. The shares remained approximately 31% below their reported 52-week high of ₹1,770, indicating that the company continues to trade well below its earlier peak despite operating improvements. The broader Nifty IT index declined approximately 1.1% during Monday’s session, making HCLTech’s modest advance relatively stronger than the sector benchmark.

The results present a mixed but generally constructive operating picture. Record quarterly profit, improved margins, higher bookings and faster AI revenue growth provide evidence of progress, while moderate constant-currency growth and HCLSoftware weakness demonstrate that the wider business has not entered an uninterrupted expansion cycle. The raised guidance floor indicates greater management confidence, but the unchanged upper boundary suggests that expectations remain disciplined.

Over the next two quarters, HCLTech’s performance will be tested by the conversion of large contract bookings into revenue, the contribution of AI services and the durability of its operating margin improvement. Stabilisation in HCLSoftware and continued growth in recurring services would strengthen the earnings outlook. A sustained improvement in constant-currency revenue, supported by margins within the guided range, would provide a more convincing foundation for a stock revaluation than the headline 21% profit increase alone.

What are the key takeaways from HCLTech’s Q2 FY27 results, AI growth and revenue guidance?

• HCL Technologies reported record quarterly net profit of ₹5,132 crore, up 21.2% year-on-year.
• Consolidated revenue increased 11.5% to ₹35,620 crore, with constant-currency growth of 2.6%.
• EBIT margin improved to 18.2%, gaining 131 basis points sequentially.
• New deal bookings reached $3.258 billion, approximately 27% higher year-on-year.
• Advanced AI revenue reached $219 million, increasing 78% year-on-year in constant currency.
• FY27 constant-currency revenue growth guidance was revised to 2.5% to 4%.
• HCLSoftware revenue declined 11.2% in constant currency despite growth in annual recurring revenue.
• The board declared an interim dividend of ₹12 per share, with October 16 as the record date.
• Future performance will depend on AI monetisation, contract execution, software recovery and sustainable margins.