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HCL Tech reported a 21% year-on-year surge in Q2 FY27 net profit to Rs 5,132 crore, driven by strong AI revenue growth and a Rs 12 per share interim dividend, signaling resilience amid industry pricing pressures.

HCL Tech Q2 Profit Jumps 21% to Rs 5,132 Crore on AI Growth

HCL Tech announced a 21% YoY rise in Q2 FY27 net profit to Rs 5,132 crore, up from Rs 4,235 crore in the same period last year, with revenue growing 12% to Rs 35,620 crore. The company declared an interim dividend of Rs 12 per share, retaining its FY27 EBIT margin guidance. Advanced AI revenue reached $219 million, up 78% YoY, while new deal wins totaled $3.26 billion. EBIT margin expanded to 18.2%, up 131 basis points from the prior quarter.

The 12% revenue growth, supported by 3% sequential increase, reflects HCL Tech's focus on AI-driven transformation. IT and Business Services grew 4.4% YoY, while Engineering and R&D rose 2% YoY. However, HCL Software revenue declined 11% YoY, though its EBIT margin improved to 20.1%. Net operating cash flow reached Rs 4,758 crore, with free cash flow at Rs 4,128 crore.

The results highlight HCL Tech's strategic shift toward automation and AI, which could differentiate it in a sector facing pricing pressures. Strong cash generation and margin expansion provide flexibility for reinvestment, but the decline in HCL Software revenue may signal challenges in legacy product lines. Competitors now face intensified competition in AI-driven services, while investors benefit from the dividend and improved margins.

HCL Tech's management must maintain FY27 EBIT margin guidance of 17.5-18.5% and meet constant-currency revenue growth forecasts of 2.5-4%. The interim dividend payment is scheduled for October 26, 2026. Sustaining margin expansion and AI revenue gains remains a key uncertainty.

HCL Tech will maintain its FY27 EBIT margin guidance and provide constant-currency revenue growth forecasts. The interim dividend payment is set for October 26, 2026.

HCL Tech's Q2 results underscore robust financial performance and AI-driven growth, but the sustainability of margin expansion and AI revenue gains remains a key uncertainty.

Topics: IT Services, AI Growth, Financial Results, Dividend Payments, EBIT Margins, Software Revenue, Cash Flow, Business Services

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Source: ET Markets