HCLTech’s FY25 profits jump 11%, Rs 60 dividend declared—What it means for investors amid AI deal frenzy

HCL Technologies Reports Solid FY25 Performance with Strong AI-Led Growth and Cautious FY26 Guidance

HCL Technologies Limited has concluded financial year 2025 with a stable operational performance and a strategic pivot to AI-led services that helped it navigate economic headwinds. With revenue surging to ₹117,055 crore and net profit growing 10.8% year-on-year to ₹17,390 crore, the company remains among the top performers in India’s IT services sector. The firm also declared a total dividend of ₹60 per share for FY25, translating to a 93.5% payout ratio, underscoring its continued commitment to shareholder returns.

As macroeconomic caution sweeps across global markets, HCLTech’s conservative revenue guidance for FY26 and muted stock response post-earnings release highlight investor prudence. Still, long-term prospects remain anchored in digital transformation and AI-first strategy execution.

How Did HCLTech’s Core Financials Shape Up in FY25?

In FY25, HCLTech’s INR revenue increased 6.5% to ₹117,055 crore, with constant currency revenue up 4.7% and USD revenue climbing 4.3% to $13.84 billion. Services revenue, the largest contributor to topline, saw a 4.8% rise in constant currency, with digital services growing 8.6%, contributing 39% of the segment’s revenue. HCLSoftware posted a 3.5% annual growth in constant currency, with Annual Recurring Revenue (ARR) reaching $1.03 billion.

Profitability metrics improved with EBIT at ₹21,420 crore—up 7% year-on-year—resulting in an 18.3% margin. Net income jumped to ₹17,390 crore, lifting the diluted earnings per share to ₹64.09 from ₹57.86 in FY24. Return on Invested Capital (ROIC) stood at 37.9%, with the services segment delivering an even stronger ROIC of 45.5%.

Free cash flow for the year was ₹21,153 crore, or $2.5 billion, with a robust FCF to Net Income ratio of 123%. The company’s financial discipline and cash generation capabilities continue to support investments in AI capabilities, R&D, and inorganic growth while enabling high dividend payouts.

What Were the Q4 FY25 Highlights?

In the fourth quarter, HCLTech recorded revenue of ₹30,246 crore, up 6.1% year-on-year and 1.2% sequentially. EBIT fell 6.5% sequentially to ₹5,442 crore but grew 8.4% compared to Q4 FY24. Net income stood at ₹4,307 crore, with a diluted EPS of ₹64.09. Despite a 0.8% decline in constant currency revenue sequentially, digital services grew 12.6% year-on-year, now contributing 40.7% of services revenue.

Bookings remained resilient, with $2.995 billion in total contract value (TCV) for the quarter. Several AI-first deals in telecom, financial services, healthcare, and manufacturing sectors were secured, underscoring the strategic relevance of GenAI and agentic automation in enterprise digital roadmaps.

How Is the Market Responding to HCLTech’s Earnings and Guidance?

Despite its operational strengths, HCLTech’s stock reaction has been tepid. On April 22, 2025—the day of the earnings release—HCLTech shares closed at ₹1,479.90, registering a marginal decline of 0.14%. Over the previous month, the stock corrected nearly 5.5% and has dropped more than 19% over the past six months. The market response has reflected concerns about slowing global IT spends and cautious FY26 guidance​.

Analyst sentiment remains mixed. HCLTech holds a consensus “Hold” rating across brokerages, with a median 12-month target price of ₹1,775.51. The rating distribution stands at 3 “Strong Buy,” 12 “Buy,” 16 “Hold,” 5 “Sell,” and 3 “Strong Sell.” While analysts appreciate the company’s AI-led differentiation and strong cash flows, concerns linger over its conservative growth outlook of 2% to 5% for FY26 in constant currency​.

What Do Institutional Holdings and FII/DII Flows Indicate?

In the quarter ended March 2025, Foreign Institutional Investors (FIIs) slightly pared their holdings from 19.38% to 19.15%. Domestic Institutional Investors (DIIs), however, increased their stake from 15.3% to 15.5%. Mutual funds raised their exposure to 8.35%, up from 8.19%, suggesting rising domestic confidence in HCLTech’s long-term fundamentals despite global caution​.

This divergence highlights a growing belief among domestic investors that HCLTech’s digital-first and AI-forward strategy could yield superior returns in the medium term, even if short-term headwinds persist.

Where Does HCLTech See Growth in FY26?

HCLTech has guided for 2% to 5% revenue growth in constant currency for FY26, with EBIT margins expected between 18% and 19%. The company remains focused on deepening its presence in high-growth verticals through AI, GenAI, and cloud-native digital engineering. Executives expressed cautious optimism, noting that while the macro environment remains volatile, medium-term deal conversion and AI-led efficiency gains should support growth.

Chairperson Roshni Nadar Malhotra and CEO C Vijayakumar reiterated their commitment to creating long-term stakeholder value. The firm also celebrated 25 years of its listing, with a strong 10-year track record of Total Shareholder Return (TSR) delivery.

How is HCLTech Leveraging AI and Digital to Build Competitive Advantage?

AI is no longer a side strategy for HCLTech—it is at the heart of its future-ready service offerings. FY25 witnessed a marked uptick in exclusive GenAI deals, driven by proprietary platforms such as AI Force, SmartTwin, and AI Foundry. These were deployed across industries including telecom, healthcare, energy, retail, and financial services.

Notable deployments include a conversational AI helpdesk for a US automotive OEM, predictive maintenance for a MedTech firm using NVIDIA Omniverse, and AI-driven cloud migration for a European financial giant. These use cases not only strengthened the company’s positioning in digital transformation but also enabled clients to improve operational efficiency by 25–30%.

The software division also posted wins with flagship offerings like BigFix, AppScan, ANA, and Actian’s Versant DB—further extending HCLTech’s digital footprint.

What’s the Investment Outlook for HCLTech Stock?

While near-term growth projections may appear conservative, HCLTech’s underlying fundamentals—high ROIC, strong free cash flow, AI-driven deal momentum, and a disciplined capital return policy—make it a viable long-term bet. Investors with a short-term outlook may remain cautious due to global demand uncertainties, but for long-term holders, the current valuation correction offers a potential entry point.

The firm’s ability to convert cash, deliver innovation at scale, and maintain profitability even during periods of global slowdown gives it resilience not matched by all peers in the IT services space.