Bengaluru: Ltd. has narrowly missed revenue estimates for the July-September quarter as clients hold back technology spending and AI upends the business model of India’s $315-billion IT services industry.
Consolidated revenue rose 11.5% to ₹35,620 crore ($3.72 billion) in the second quarter of the ongoing fiscal. Analysts, on average, expected revenue to come in at ₹35,686 crore, according to data compiled by LSEG. Net profit rose 21.2% to ₹5,132 crore, compared with analysts’ estimate of ₹4,859 crore. Annualised AI revenue rose to $219 million in the reporting quarter from $171 million in the previous quarter.
HCLTech has now narrowed its annual revenue growth forecast to 2.5% to 4% from 1% to 4% in the previous quarter. Most brokerages expected the company to retain the forecast.
AI impact on IT sector
The rise of AI has shaken India’s IT services industry, forcing firms to overhaul their business model and offer steep discounts. Despite AI unlocking newer revenue streams, it is shrinking traditional revenue as clients are increasingly tying fees to performance outcomes instead of hours worked.
Last week, Ltd.’s revenue was in line with estimates and total deal wins dropped. However, the acceleration in AI revenue lifted the stock by as much as 6.2% on Friday.
HCLTech Q2 Results: More Details
New deal wins for the quarter stood at $3.26 billion, up from $2.4 billion in the preceding quarter and $2.57 billion in the same period last year. The current quarter’s figure includes $1.14 billion Mercedes Benz contract.
The company reported an operating margin of 18.2%, up 80 basis points.
The company announced partnership with Anthropic ahead of earnings, saying that it will set up a dedicated business unit to build AI agents and accelerate Claude adoption.
On Monday, HCLTech shares rose 0.52% to ₹1,223.00 apiece on the NSE even as the Nifty IT index ended the day 1.1% lower.