For the March 2026 quarter, the company reported revenue of $3.6 billion, reflecting a decline of 2.9 percent on a quarter-on-quarter basis, although it grew 5.3 percent compared to the same period last year. In constant currency terms, revenue fell 3.3 percent sequentially, indicating softness in demand across key business segments.

In rupee terms, revenue stood at ₹33,981 crore, up 12.34 percent year-on-year, but showing only marginal growth on a quarterly basis. Net profit for the quarter came in at ₹4,488 crore, rising 4.2 percent year-on-year. Despite the increase, the numbers were below market expectations, which impacted investor sentiment.

For the full financial year FY26, HCLTech reported revenue of $14.6 billion, marking a 6 percent increase over the previous year. However, net profit declined by 4.3 percent to ₹16,642 crore, reflecting pressure on margins and changing market dynamics.

A key concern highlighted by the company was what it described as “AI-led deflation.” As businesses increasingly adopt automation and artificial intelligence, the value of traditional IT deals is shrinking. The company estimates that this trend could reduce revenue in conventional service lines by 2 to 3 percent annually. Deals that were previously larger in size are now being executed at lower costs due to efficiency gains enabled by AI.

To counter this shift, HCLTech is expanding its focus on advanced AI services. The company stated that its AI portfolio has reached an annualised revenue run rate of $620 million and is expected to grow at a strong pace in the coming years. Management indicated that AI is now becoming a central part of most client engagements.

Following the results announcement, shares of HCL Technologies declined sharply, falling close to 10 percent during trading on the National Stock Exchange. The drop was driven by weaker-than-expected earnings and a cautious outlook for the next financial year.

The company has projected revenue growth of 1 to 4 percent in constant currency for FY27, which is lower than what analysts had anticipated. Management attributed this conservative guidance to continued market volatility, reduced discretionary spending by clients, and certain client-specific ramp-downs expected in the coming quarters.

Chief Executive Officer C. Vijayakumar described the current business environment as uncertain, noting that traditional services are facing pressure due to global economic conditions and changing technology trends. He emphasized that the company’s priority is to position itself strongly for long-term growth through AI-driven opportunities.

In terms of business segments, IT and business services as well as engineering and R&D services recorded modest growth during the quarter. However, the software segment saw a significant decline, which weighed on overall performance. Geographically, the company saw growth in India and the Americas, while the European market remained under pressure.

Despite the near-term challenges, HCLTech reported strong deal wins, with total contract value reaching $1.93 billion for the quarter and over $9 billion for the full year. The company also continued hiring, adding employees during the quarter and onboarding fresh graduates over the year.

Analysts have taken a cautious view following the results. Firms such as JPMorgan Chase and Morgan Stanley highlighted weak demand trends, margin pressure, and limited visibility for near-term growth. They also pointed out that the impact of AI on traditional services could continue to affect revenue in the short term.

Overall, the results reflect a transition phase for the IT services industry, where companies are adjusting to new realities shaped by automation and artificial intelligence. While HCLTech is investing heavily in future technologies, the immediate outlook remains cautious amid global uncertainties and evolving client priorities.

The post HCLTech Q4 FY26 Results: Revenue Slips Sequentially, AI-Led Deflation Weighs on Growth; Stock Falls Sharply appeared first on Mission Ki Awaaz.