HCLTech Q2 Review: AI-Led Growth Drives Record Win and Margin Momentum
HCLTech Ltd. delivered a resilient Q2 FY26 performance, registering a 2.4%/4.6% QoQ/YoY revenue expansion in CC term, underpinned by broad-based momentum across IT, Business, and Engineering Services.
Key Highlights of HCLTech Q2 Results
Operating margin strengthened to 17.5%, reflecting improved utilization, favorable forex movements, and operational discipline despite restructuring costs. This growth was driven by the company’s focus on Artificial Intelligence and digital transformation.
Segment-Wise Performance
The IT services segment witnessed a growth of 3.1% QoQ, driven by strong demand for digital transformation services. The Business Services segment also saw a growth of 2.5% QoQ, driven by increased adoption of Cloud Computing and cybersecurity services.
Management Commentary
The management commented that the company’s focus on AI and Machine Learning has helped drive growth and improve margins. The company also announced plans to increase its investment in Digital Transformation and Emerging Technologies.
Brokerage Views
IDBI Capital has upgraded the stock to ‘Buy’ post the Q2 results, citing the company’s strong growth momentum and improving margins. Other brokerages have also maintained their ‘Buy’ ratings, with target prices ranging from ₹1200 to ₹1500.
Investor Takeaways
Investors can look at HCLTech as a long-term bet, given its strong growth momentum and improving margins. The company’s focus on AI and Digital Transformation is expected to drive growth in the coming quarters.
Valuations
The stock is currently trading at a PE of 25x, which is slightly above its 5-year average. However, given the company’s strong growth momentum and improving margins, the valuations are justified.
Conclusion
In conclusion, HCLTech’s Q2 results were strong, driven by broad-based momentum across IT, Business, and Engineering Services. The company’s focus on AI and Emerging Technologies is expected to drive growth in the coming quarters. Investors can look at HCLTech as a long-term bet, given its strong growth momentum and improving margins.
