HCL Technologies swings to loss as negative other income overwhelms operations
Standalone operating margin fell 7.51 percentage points year on year, while the stock's 10.82% drop was unusually large against its results history.
Filed 23 Apr 2026, 12:57 IST · HCL Technologies Ltd (HCLTECH)
Key takeaways
- Standalone net profit swung to a loss of Rs 900 cr as negative other income of Rs 4,488 cr pushed profit before tax below zero.
- Operating margin fell 7.51 percentage points year on year because revenue declined 4.04% while expenses rose 6.69%.
- The stock fell 10.82% on the results reaction day, far exceeding its 0.77% median absolute move after the last eight results.
Price around the results
Negative other income drove the reported loss
HCL Technologies reported a standalone net loss of Rs 900 cr in Q4FY26, despite operating profit of Rs 3,264 cr. Negative other income of Rs 4,488 cr represented 248.23% of pre-tax profit and overwhelmed the operating result, taking profit before tax to a loss of Rs 1,808 cr. The tax line was a credit of Rs 908 cr, but the reported tax rate still rose to 50.22% from 25.31% a year earlier.
Costs outpaced revenue and margin weakened
Year-on-year revenue fell 4.04% while expenses increased 6.69%, causing operating margin to narrow 7.51 percentage points. Sequentially, revenue declined 15.41% while expenses fell only 2.26%, leading to a 10.05-percentage-point margin contraction. The 25.32% operating margin remained 5.63 percentage points above the 19.69% median of 19 Information Technology peers that have reported the quarter.
The margin trend reversed after Q3's rebound
Operating margin had improved to 35.37% in Q3FY26 from 30.60% in Q2FY26, but fell to 25.32% in Q4FY26. This was a reversal rather than a third straight quarterly decline, though the latest margin was also below the 32.83% recorded in Q4FY25. Operating profit fell 25.99% year on year and 39.44% sequentially.
Market reaction was far outside its usual range
The stock fell 10.82% on the reaction day, with the decline reaching 16.72% by day five and 22.01% by day 15. That compares with a median absolute post-results move of 0.77% across the last eight results, when the stock rose after five and fell after three. The reaction also overlapped with a corporate action, which is relevant when reading the size of the move.
Q4FY26 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹12,890 cr | ₹15,239 cr | -15.41% | -4.04% |
| Other income | ₹-4,488 cr | ₹-657 cr | -583.11% | — |
| Expenses | ₹9,626 cr | ₹9,849 cr | -2.26% | +6.69% |
| Operating profit | ₹3,264 cr | ₹5,390 cr | -39.44% | -25.99% |
| Operating margin (%) | 25.32% | 35.37% | — | — |
| Interest | ₹29 cr | ₹63 cr | -53.97% | -29.27% |
| Depreciation | ₹555 cr | ₹630 cr | -11.90% | -3.81% |
| Profit before tax | ₹-1,808 cr | ₹4,040 cr | — | — |
| Tax | ₹-908 cr | ₹1,058 cr | — | — |
| Net profit | ₹-900 cr | ₹2,982 cr | — | — |
| EPS (₹) | ₹-3.33 | ₹11.02 | — | — |
Operating margin of 25.32% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -10.82% | -10.01% |
| Next session | -11.35% | — |
| 5 sessions | -16.72% | -15.10% |
| 15 sessions | -22.01% | — |
| 30 sessions | -19.88% | — |
Volume on the results session was 8.30× its 20-day average.
What to watch
- Whether operating margin recovers from 25.32% after the 10.05-percentage-point sequential decline.
- Whether revenue reverses the 15.41% sequential fall.
- Whether the negative other income of Rs 4,488 cr recurs and again overwhelms operating profit.