HCLTech's advanced AI revenue hit $219 million, up 78%YoY, carries higher margins, and is becoming a visible, genuine growth engine. Ebit margin expanded 131 bps to 18.2%, driven by Project Ascent, AI efficiencies and selling, general and administrative leverage, beating management expectations. Software revenue fell 5.8% on fewer multi-year renewals, but ARR grew 7.6%; the trimmed 4% guidance top-end looks conservative.
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IDBI Capital Report
IDBI Capital maintained Hold rating on HCLTech Ltd. with an unchanged Rs 1,380 target price, implying about 13% potential upside from the report's currebt market price of Rs 1,220.
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The brokerage highlighted Advanced AI revenue growth of 78% YoY to $219 million, a 131-bps QoQ expansion in Ebit margin to 18.2%, and $3.3 billion of bookings, while calling FY27 guidance conservative.
The brokerage highlighted that HCLTech delivered one of its cleanest quarters in a while. Revenue of $3,724 million grew 2.3% QoQ and 2.6% YoY in constant currency, with services up 3% QoQ and 4% YoY (2.3% organic).
Inorganic contribution was about $35.6 million, mostly from the HPE Telco Solutions deal (two months) and Jaspersoft. Growth was broadbased: five of seven verticals grew YoY, led by retail and consumer packaged goods (+14%) and financial services (+7.1%), while the US grew 3.5% and India 21.8%, though Europe slipped 0.3%.
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Bookings of $3.3 billion, up 35% QoQ and 27% YoY, were the second-highest ever and the strongest first half on record. The real story is earnings quality.
Advanced AI revenue reached $219 mn, up 78% YoY, and now runs at $876 mn annualised, with management guiding to services margins 7-10% above traditional work and 70%+ gross margins on IP and platforms.
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