HCLTech Shares Surge 7% After Strong Q2 Results; AI Revenue Jumps 78%

HCLTech shares surged more than 7 per cent on October 13 after the IT major reported strong Q2 FY27 results, with higher profit, improving margins, robust deal wins and a sharp rise in advanced AI revenue lifting investor sentiment.

HCLTech shares jumped sharply in Tuesday's trading session, extending the positive reaction to the company's September-quarter results announced after market hours on Monday.

The stock climbed as much as 7.16 per cent to Rs 1,296.60, compared with Monday's close of Rs 1,223. The rally came as investors responded positively to stronger profitability, robust deal bookings and improving growth expectations.

Q2 Profit Jumps 21 Per Cent

HCLTech's consolidated net profit rose 21.2 per cent year-on-year to Rs 5,132 crore in Q2 FY27 from Rs 4,235 crore a year earlier. On a sequential basis, net profit increased 11 per cent.

Revenue from operations increased 11.5 per cent year-on-year to Rs 35,620 crore, while revenue grew 3 per cent sequentially.

In constant-currency terms, revenue increased 2.6 per cent year-on-year and 2.3 per cent sequentially, indicating that the company continued to deliver growth despite a challenging global technology spending environment.

Margins Improve Sharply

HCLTech's EBIT margin improved to 18.2 per cent, up 131 basis points sequentially and 71 basis points from the year-ago period.

The improvement comes at a time when investors have been closely watching margins across the IT sector amid pricing pressure, AI-led productivity gains and changing client spending patterns.

The company said better revenue growth, service mix and operating efficiencies supported the margin improvement.

Advanced AI Revenue Jumps 78 Per Cent

HCLTech's advanced AI business delivered particularly strong growth.

Advanced AI revenue reached USD 219 million in Q2 FY27, rising 28.4 per cent sequentially and 78 per cent year-on-year in constant-currency terms. This takes annualised advanced AI revenue to around USD 876 million.

The numbers are significant because investors have been trying to assess whether AI will primarily put pressure on traditional IT services or create a meaningful new revenue opportunity.

HCLTech is positioning its AI strategy around both protecting its traditional services business from AI-led pricing pressure and creating new revenue streams through advanced AI services.

Deal Wins Hit USD 3.26 Billion

HCLTech reported total contract value of USD 3.258 billion for the quarter, up 27 per cent year-on-year. This was the company's strongest quarterly booking performance since September 2023.

A major win during the quarter was a USD 1.14 billion deal with Mercedes-Benz, adding to the company's order-book visibility.

Strong bookings are important because they provide some confidence that the improvement in revenue growth can continue over the coming quarters.

FY27 Revenue Guidance Raised

HCLTech also raised the lower end of its FY27 revenue growth guidance.

The company now expects full-year revenue growth of 2.5 per cent to 4 per cent in constant-currency terms, compared with the earlier lower-end guidance of 1 per cent. Services revenue growth is expected to remain between 3 per cent and 4 per cent.

The company retained its EBIT margin guidance at 17.5 per cent to 18.5 per cent. The increase in the lower end of the revenue outlook was viewed positively by investors as it suggests management has greater confidence in the growth trajectory for the rest of FY27.

Disclaimer: The article is for informational purposes only and not investment advice