HCL Tech’s Q3 net slips 11%, board declares interim dividend of ₹12 for FY26

By Admin

13 Jan, 2026

Overview of Q3 FY26 Performance
HCL Technologies, the Noida-based IT major promoted by Shiv Nadar, reported a mixed set of numbers for the third quarter of FY26. While the company posted strong revenue growth and robust operational metrics, its net profit saw a year-on-year decline due to a one-time statutory cost impact.

Net Profit Impacted by One-Time Labour Code Cost
For Q3 FY26, HCL Tech posted a net profit of ₹4,076 crore, registering an 11% decline compared to ₹4,591 crore in the same quarter last year. The company clarified that this drop was primarily due to an additional one-time cost related to the implementation of new labour codes.
This exceptional expense had an impact of ₹956 crore at the EBIT level and ₹719 crore at the net income level, significantly affecting reported profitability for the quarter.

Revenue Growth Remains Strong
Despite the profit decline, revenue performance remained robust. Revenue from operations stood at ₹33,872 crore, reflecting a healthy 13% growth over ₹29,890 crore reported in the corresponding quarter last year. This growth highlights sustained demand across key service lines and geographies.

Management Commentary and Operational Highlights
HCL Tech CEO and Managing Director C. Vijayakumar described the quarter as a standout performance operationally. Revenue grew 4.2% quarter-on-quarter in constant currency terms, while operating margins recovered strongly to 18.6%.
He also noted that the company crossed $15 billion in annualised revenue, supported by strong client demand and expanding digital capabilities. According to him, HCL Tech is well positioned to address evolving AI requirements across industries.

AI and New Bookings Drive Momentum
New bookings during the quarter stood at $3 billion, marking a 43% year-on-year increase. Services revenue grew 1.8% QoQ in constant currency, led by a sharp 19.9% QoQ growth in Advanced AI services.
Software revenue also performed strongly, growing 28.1% QoQ and 3.1% YoY in constant currency terms, aided by seasonality and growth in the data intelligence portfolio.

AI as a Key Growth Engine
HCLTech Chairperson Roshni Nadar Malhotra highlighted AI as a major growth driver across the company’s portfolio. AI-led services generated revenue of $146 million during the quarter, up from $100 million in the previous quarter, underlining accelerating enterprise adoption.

Margins, Cash Position, and Financial Strength
Chief Financial Officer Shiv Walia stated that Q3 EBIT margins, excluding the one-time labour code impact, stood at 18.6%, up 111 basis points QoQ.
The company’s cash conversion remained strong, with net income on a last-twelve-month basis at 120%. HCL Tech ended the quarter with its highest-ever cash balance of ₹34,306 crore, reinforcing its strong balance sheet.

Interim Dividend Announcement
The board of HCL Tech declared an interim dividend of ₹12 per equity share for FY26. The dividend is scheduled to be paid to eligible shareholders on January 27, reflecting the company’s continued focus on shareholder returns despite near-term cost pressures.

FY26 Outlook and Workforce Update
For FY26, management expects revenue growth of 4% to 4.5% year-on-year in constant currency terms, with services revenue growth projected between 4.75% and 5.25%. EBIT margins are estimated in the range of 17% to 18%, excluding the one-time impact of new labour laws.
During the quarter, the company added 2,852 freshers. Attrition on an LTM basis improved to 12.4%, compared to 13.2% a year earlier. As of December 31, 2025, HCL Tech’s total headcount stood at 2,26,379.

Conclusion
While HCL Tech’s Q3 FY26 net profit was impacted by a one-time regulatory cost, the underlying business fundamentals remain strong. Consistent revenue growth, expanding AI capabilities, healthy margins, and a solid cash position position the company well for sustainable growth in the coming quarters.