HCLTech lifts margin as lower tax rate drives 21.15% profit growth
Sequential margin recovery continued, although interest expense rose 130.95% from the previous quarter's low base.
Filed 12 Oct 2026, 16:58 IST · after market close · HCL Technologies Ltd (HCLTECH)
Key takeaways
- Consolidated net profit rose 21.15% year on year as the tax rate fell 5.07 percentage points and operating profit grew 14.24%.
- Operating margin improved 1.12 percentage points sequentially because revenue grew 3.01% while expenses increased 1.57%.
- Other income contributed only 3.03% of pre-tax profit, so the quarter's profit growth was not materially dependent on non-operating income.
Price around the results
Profit growth outpaced revenue in Q2FY27
HCL Technologies' consolidated revenue grew 11.51% year on year, while operating profit increased 14.24%, showing conversion ahead of topline growth. Net profit grew faster at 21.15%, helped by the lower tax rate and a 9.77% decline in interest expense from a year earlier. Other income fell 52.77% year on year and represented 3.03% of pre-tax profit, limiting its influence on earnings quality.
Sequential margin recovery was supported by cost control
Revenue increased 3.01% sequentially, but expenses rose only 1.57%, widening operating margin by 1.12 percentage points. The margin recovery follows 19.75% in Q4FY26 and 19.87% in Q1FY27, after 21.88% in Q3FY26; this quarter therefore reversed the recent weakness rather than extending a decline. Interest expense rose 130.95% sequentially, while the tax rate fell 3.62 percentage points.
Results were filed after the market close
The results were filed after market close, so there is no immediate share-price reaction to assess. Across the last eight result reactions, the stock was up four times and down four times, with a median absolute move of 3.30%, indicating a mixed historical response rather than a consistent direction.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹35,620 cr | ₹34,579 cr | +3.01% | +11.51% |
| Other income | ₹196 cr | ₹361 cr | -45.71% | -52.77% |
| Expenses | ₹28,143 cr | ₹27,709 cr | +1.57% | +10.81% |
| Operating profit | ₹7,477 cr | ₹6,870 cr | +8.84% | +14.24% |
| Operating margin (%) | 20.99% | 19.87% | — | — |
| Interest | ₹194 cr | ₹84 cr | +130.95% | -9.77% |
| Depreciation | ₹1,012 cr | ₹1,039 cr | -2.60% | -2.97% |
| Profit before tax | ₹6,467 cr | ₹6,108 cr | +5.88% | +13.42% |
| Tax | ₹1,335 cr | ₹1,482 cr | -9.92% | -8.94% |
| Net profit | ₹5,132 cr | ₹4,626 cr | +10.94% | +21.15% |
| EPS (₹) | ₹18.96 | ₹17.09 | +10.94% | +21.31% |
What to watch
- Whether operating margin holds above 20.99% after the sequential recovery.
- Whether expenses continue to grow slower than revenue after the 1.57% versus 3.01% gap.
- Whether the tax rate remains near the current 20.64% rather than returning to the 24.26% level of Q1FY27.