Shares of HCLTech came under sharp selling pressure, falling more than 8% after the company reported weaker-than-expected results for the fourth quarter of FY26. The disappointing performance across key financial metrics, along with cautious guidance for the upcoming financial year, weighed heavily on investor sentiment.
Weak Q4 Performance Across Key Metrics
HCLTech’s fourth-quarter earnings failed to meet market expectations on multiple fronts. The company reported a constant currency revenue decline of 3.3%, significantly worse than the anticipated drop of around 1%. This marked a clear slowdown in business momentum during the quarter.
Margins also disappointed. The company posted EBIT margins of 16.5%, falling short of analyst expectations of 17.6%. The margin pressure highlights ongoing cost challenges and subdued demand in certain segments of the IT services industry.
FY26 Growth Miss Adds to Concerns
The weak quarterly performance also impacted the company’s full-year numbers. HCLTech reported FY26 revenue growth of 3.9%, missing its own guidance range of 4% to 4.5%.
This miss is particularly notable because the company had earlier revised its guidance during the December quarter, raising it to this range from a broader 3% to 5% band. The inability to meet even the revised expectations has raised concerns about execution and demand visibility.
Adding to the disappointment, HCLTech reported a decline in annual profit for FY26 — the first such drop in 16 years — signalling a challenging operating environment.
FY27 Guidance Falls Short of Street Estimates
Investor sentiment was further dampened by the company’s outlook for FY27. HCLTech guided for constant currency revenue growth in the range of 1% to 4%, which fell below analyst expectations of 3% to 6%.
The conservative guidance suggests that demand conditions may remain uncertain, particularly in discretionary IT spending, which continues to face pressure globally.
Positives: Margin Outlook Improved, AI Segment Shows Strength
Despite the overall weak performance, there were a few positive takeaways. The company raised its EBIT margin guidance for FY27 to 17.5%–18.5%, compared to the earlier range of 17%–18%. This indicates a focus on cost optimisation and operational efficiency going forward.
Another bright spot was the performance of its Advanced AI segment. Revenue from this segment grew 6.1% sequentially in constant currency terms, reaching $155 million. This reflects increasing traction in AI-led services, a key growth area for IT companies.