HCLTech Q2 Results Review — Strong Bookings Underpin Revenue Visibility Says Systematix Maintaining 'Hold'

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Systematix Report

HCLTech Ltd. delivered a strong Q2 FY26 performance, with revenue growing 2.4% QoQ in constant currency and 2.8% in USD, ahead of expectations. HCLTech raised the lower end of its FY26 services revenue growth guidance to 4–5% (from 3–5%), reflecting steady momentum in the services business.

However, it maintained overall company-level revenue growth guidance at 3–5%, citing continued softness in the software segment driven by a decline in perpetual license revenues.

Bookings came in strong at $2.6 billion, marking the first quarter above $2.5 billion without any mega deal, supported by balanced wins across verticals. The pipeline is at an alltime high, driven by advanced AI propositions, with GenAI now embedded in nearly every deal.

While manufacturing remains affected by the auto sector weakness, other verticals like financial services, life sciences, and technology continue to perform well.

We remain cautiously optimistic about sustaining growth in H2, supported by a healthy deal pipeline and reasonable visibility on revenue, while monitoring profitability trends.

Management retained its FY26 Ebit margin guidance of 17–18%, factoring in wage hikes expected in H2. We maintain our USD revenue CAGR estimate of 5.9% over FY25–27E.

While our FY26E/FY27E margin assumptions remain largely unchanged, we have raised our INR revenue and earnings estimates by 2.6%/2.3% and 2.1%/3.4%, respectively.

We reiterate Hold with a revised target price of Rs 1,610 (Rs 1,592 earlier), valuing the company at a lower multiple of 22.5x FY27E EPS (23x earlier).

Key risks:

Sudden exits at the leadership level, sustained pressure on client discretionary spending in FY26/FY27, non-encouraging outcomes of cost saving programs, etc.

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