HCL Technologies (HCLTech), one of India’s largest IT services companies, delivered an encouraging financial performance for the second quarter of FY27, supported by strong deal bookings, improving operating margins and rapidly expanding artificial intelligence revenue.
The company announced its results on Monday, October 12, 2026, reporting consolidated revenue of ₹35,620 crore, representing an 11.5% year-on-year increase, while net profit surged 21.2% to ₹5,132 crore.
The results exceeded market expectations and demonstrated improving profitability despite continued uncertainty surrounding global technology spending.
HCLTech also secured record new deal bookings of approximately $3.3 billion, strengthened its artificial intelligence capabilities and raised the lower end of its full-year revenue growth guidance.
HCLTech Q2 FY27 Financial Performance
The September quarter demonstrated stronger revenue growth, improved operating efficiency and healthy profitability.
Key financial highlights included:
- Revenue: ₹35,620 crore, up 11.5% year-on-year and 3% sequentially.
- Net profit: ₹5,132 crore, up 21.2% year-on-year and 11% sequentially.
- Dollar revenue: $3.72 billion, up 2.2% year-on-year.
- Constant-currency revenue growth: 2.3% quarter-on-quarter.
- EBIT margin: 18.2%, expanding 131 basis points sequentially.
- New deal bookings: $3.26 billion.
- Advanced AI revenue: $219 million for the quarter.
- Annualised advanced AI revenue: $876 million.
- Interim dividend: ₹12 per share.
The company reported stronger-than-expected profitability, with net profit comfortably exceeding analyst estimates of approximately ₹4,856 crore.
Although revenue growth in constant currency remained relatively modest, the improvement in operating margins and record order inflows provided encouraging signals about the company’s business outlook.
Record $3.3 Billion Deal Bookings Strengthen Growth Visibility
One of the biggest highlights was the company’s exceptional deal-winning performance.
HCLTech secured approximately $3.3 billion in new contracts during the September quarter, representing a 27% year-on-year increase.
The company also recorded its strongest first-half deal bookings, demonstrating continued demand for large-scale technology transformation projects.
Large contract wins are particularly important in the current environment because discretionary technology spending remains cautious.
Rather than committing heavily to smaller experimental projects, global enterprises are increasingly prioritising major transformation programmes capable of improving productivity, modernising infrastructure and reducing operating costs.
HCLTech’s strong order inflows suggest that its technology offerings are resonating with customers seeking long-term operational improvements.
However, these contracts will contribute to revenue gradually as implementation progresses.
Mercedes-Benz Deal Becomes a Major Growth Catalyst
Among the company’s most significant contract wins was a $1.14 billion agreement with German automobile manufacturer Mercedes-Benz.
The deal represents an important milestone for HCLTech’s automotive technology business and its expanding presence in large-scale digital transformation.
The engagement is expected to involve advanced technology services and AI-driven transformation initiatives.
Automotive manufacturers are increasingly investing in software-defined vehicles, connected mobility, digital engineering, cloud infrastructure and intelligent manufacturing.
For HCLTech, partnerships with global automotive companies provide opportunities to expand beyond conventional IT outsourcing into specialised engineering and enterprise technology services.
The Mercedes-Benz agreement also strengthens revenue visibility over the coming years, although the financial contribution will depend on the pace of contract execution.
Advanced AI Revenue Surges 78%
Artificial intelligence emerged as one of the strongest contributors to HCLTech’s quarterly performance.
The company’s advanced AI revenue reached $219 million during Q2 FY27, increasing 78% year-on-year and 28.4% sequentially in constant currency.
On an annualised basis, the business now generates approximately $876 million.
Advanced AI contributes around 6% of the company’s overall revenue, making it an increasingly meaningful part of HCLTech’s business.
The company is expanding its offerings across intelligent automation, AI-powered software engineering, data modernisation, enterprise platforms and autonomous business processes.
Importantly, AI is beginning to contribute not only to revenue growth but also to operating profitability.
Management indicated that advanced AI contributed approximately 32 basis points to the improvement in operating margins during the quarter.
This suggests that specialised AI services and technology platforms could potentially offer more attractive economics than some traditional labour-intensive IT services.
Anthropic Partnership Strengthens AI Ambitions
Alongside its quarterly results, HCLTech announced a strategic partnership with Anthropic, the artificial intelligence company behind the Claude family of AI models.
The collaboration aims to accelerate enterprise adoption of agentic AI, which involves AI systems capable of performing complex tasks and workflows with greater autonomy.
HCLTech plans to establish a dedicated Anthropic Business Unit and Centre of Excellence to develop enterprise solutions using Anthropic’s technology.
The partnership will also involve integrating Claude and Claude Code into selected HCLSoftware products.
The collaboration is particularly focused on enterprise governance, cybersecurity and responsible AI deployment.
For HCLTech, the agreement strengthens its position in the rapidly expanding enterprise AI ecosystem and could help attract customers seeking secure, scalable AI solutions.
Operating Margin Expands to 18.2%
HCLTech delivered a meaningful improvement in profitability during the quarter.
Its EBIT margin expanded to 18.2%, compared with approximately 16.9% in the preceding quarter.
The improvement of 131 basis points reflected operational efficiencies, better business performance and contributions from higher-value AI services.
The company’s IT and Business Services segment recorded an EBIT margin of approximately 18.6%.
Higher-margin technology services and improved operating leverage helped offset ongoing investments in workforce capabilities and business expansion.
However, the company also incurred restructuring expenses during the quarter, affecting reported profitability.
Management maintained its full-year EBIT margin guidance of 17.5–18.5%, indicating confidence in sustaining relatively stable profitability.
FY27 Revenue Growth Guidance Raised
Following the strong quarterly performance and record deal bookings, HCLTech revised its full-year revenue growth outlook.
The company now expects consolidated revenue growth of 2.5–4% in constant currency for FY27.
Previously, management had guided for growth of 1–4%.
The increase in the lower end of the guidance range suggests greater confidence in business visibility and contract execution.
Services revenue growth guidance remains at 3–4%.
However, the unchanged upper end of the overall guidance range indicates that management is still cautious about the broader demand environment.
Large international clients continue to face uncertainty surrounding economic growth, technology budgets and geopolitical developments.
While major deal wins provide future revenue visibility, converting these contracts into actual revenue will remain essential.
HCLSoftware Remains a Weak Spot
Despite the encouraging performance of its services and AI businesses, HCLTech’s software division experienced weakness during the quarter.
HCLSoftware revenue declined approximately 5.8% sequentially.
The slowdown was partly associated with fewer renewals of multi-year subscription licences.
Revenue from these renewals declined substantially compared with the corresponding period last year.
The company expects several large software renewal opportunities to return during FY28 and FY29.
Nevertheless, the weakness demonstrates that growth remains uneven across HCLTech’s business segments.
The software business is important because intellectual property-based products can provide attractive profitability and recurring revenue opportunities.
A sustained recovery in software renewals would therefore strengthen the company’s overall earnings profile.
Workforce Expansion Reflects Growing Project Demand
HCLTech also expanded its workforce during the quarter, adding approximately 6,450 employees.
The hiring activity reflects the company’s growing order pipeline and continued investment in technology capabilities.
The company is increasing its focus on fresh graduates while also developing specialised skills in AI, cloud computing, cybersecurity and digital engineering.
Unlike traditional IT outsourcing, where revenue growth often required proportionate increases in employee numbers, AI-driven delivery models are gradually changing workforce requirements.
Companies increasingly need employees capable of managing sophisticated technology platforms, integrating AI into enterprise systems and delivering higher-value services.
For HCLTech, maintaining the right balance between hiring, employee productivity and automation will be important for protecting margins.
HCLTech Shares Rally After Strong Results
Investors responded positively to the company’s quarterly performance.
Following the October 12 earnings announcement, HCLTech shares rallied sharply during trading on October 13, gaining more than 8% at their intraday peak.
The stock eventually closed around ₹1,326 on the BSE.
The rally reflected optimism surrounding the company’s stronger profitability, record order bookings, AI revenue growth and improved annual guidance.
Brokerage firms also highlighted the potential for large contract wins to support revenue growth over the next several years.
However, analysts remained cautious about subdued discretionary spending, software revenue weakness and the time required for major deals to translate into earnings.
The positive market reaction therefore reflected improving expectations rather than a complete recovery in the IT services demand environment.
Competition in India’s IT Industry Is Intensifying
HCLTech’s performance comes during an important earnings season for India’s technology services industry.
Larger competitors including TCS, Infosys and Wipro are also attempting to accelerate growth through artificial intelligence, cloud modernisation and enterprise transformation.
AI represents both an opportunity and a challenge for the industry.
Traditional outsourcing contracts could face pricing pressure as automation reduces the number of employees required for routine software development and maintenance.
At the same time, enterprises are investing in AI platforms, cybersecurity, data infrastructure and technology modernisation.
HCLTech is attempting to benefit from this transition by combining its engineering capabilities, software products and global technology partnerships.
Its growing advanced AI business suggests that the strategy is beginning to produce measurable results.
What Investors Should Watch Next
The next few quarters will determine whether HCLTech can convert its record order pipeline into sustained revenue and earnings growth.
Investors will closely monitor the execution of large contracts, particularly the Mercedes-Benz agreement.
Advanced AI revenue will remain another important indicator, especially as the company expands its partnership with Anthropic.
Operating margins will also attract attention.
If AI-related revenue continues growing rapidly while operational efficiencies improve, HCLTech could sustain stronger profitability.
However, a prolonged slowdown in software renewals or weaker discretionary technology spending could restrict overall growth.
The company’s ability to deliver revenue growth within its revised 2.5–4% guidance range will be an important test of management’s confidence.
The Bigger Picture
HCLTech’s Q2 FY27 results demonstrate improving business momentum at a time when the global IT services industry continues to face uncertainty.
Revenue increased 11.5% to ₹35,620 crore, while net profit surged 21.2% to ₹5,132 crore.
Record deal bookings of approximately $3.3 billion provide stronger visibility into future business opportunities.
Meanwhile, advanced AI revenue growth of 78% highlights the company’s increasing participation in one of the fastest-growing areas of enterprise technology spending.
The Mercedes-Benz agreement and Anthropic partnership further strengthen its position in digital engineering and artificial intelligence.
However, challenges remain.
Software revenue weakness, subdued discretionary spending and the relatively modest full-year growth outlook suggest that a broad-based industry recovery has not yet arrived.
For HCLTech, the next phase of growth will depend on converting record contract wins into sustained revenue, scaling its AI business and maintaining operating profitability.
If the company can execute successfully, its expanding AI capabilities and strong deal pipeline could support a more durable earnings recovery over the coming years.
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