HCLTech vs Dixon Technologies Q4 FY26

HC

HCLTech

Q4 FY26 · Information Technology

HCL Tech reported Q4 FY26 revenue of $3.68B, up 2.4% YoY but down 3.3% QoQ, missing expectations due to delayed procurement decisions and discretionary spending cuts by two large US telecom clients. Services revenue grew 4.2% YoY while software declined 14% YoY. Full-year revenue grew 3.9% in constant currency, with services up 4.8%. EBITDA margin (ex-restructuring) was 17.7%, down 20bps YoY. Management guided FY27 revenue growth of 1-4% (services 1.5-4.5%) and EBIT margin of 17.5-18.5%, reflecting headwinds from two client-specific reductions (~50bps) and continued soft discretionary spend. AI momentum remains strong with $155M quarterly advanced AI revenue (+6.1% QoQ) and a $100M+ AI factory deal. Key risk: further escalation of tariff volatility or client-specific issues could pressure growth.

Guidance read

FY27 revenue growth 1-4% CC: Consolidated revenue growth guidance for FY27 in constant currency; services growth 1.5-4.5%. FY27 EBIT margin 17.5-18.5%: Operating margin guidance for FY27, excluding impact of acquisitions. Two clients to cause ~50bps growth headwind in FY27: Specific client reductions in manufacturing and retail will impact growth by about 50 basis points. AI native services to grow 25-30%: Management expects advanced AI services (AI factory, custom silicon) to grow at 25-30% annually.

Risk read

Key risks include Telecom discretionary spending cuts may persist — Two large US telecom clients cut discretionary spend in Q4; impact expected to continue through calendar 2026.; AI deflation could accelerate beyond 2-3% — Analyst questioned if deflation from AI could expand; management acknowledged risk but maintained 2-3% estimate for HCL.; Software revenue volatility from government deals — Q4 software revenue missed due to delayed US government decisions; timing of closures unpredictable.; Geopolitical uncertainty in Europe — Management noted softness in Europe due to geopolitical escalations, which could worsen..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Dixon Technologies reported Q4 FY26 revenue of ₹10,520 crore with EBITDA of ₹418 crore and PAT of ₹192 crore, excluding exceptional items. Full-year revenue grew 26% YoY to ₹48,893 crore, driven by telecom and IT hardware segments, while mobile volumes remained flat due to memory price inflation and softer demand. Management guided for 15-17% revenue growth in FY27 (excluding Vivo) to ~₹56,000 crore, with margin pressure from PLI expiry offset by backward integration (camera modules, displays). Key growth drivers include telecom (targeting ₹7,500-8,000 crore), IT hardware (3x to >₹4,000 crore), and lighting (2x to ₹1,700 crore). The display JV with HKC will commence commercial production in Q4 FY27. Risks include delayed Vivo JV approval and potential margin compression from PLI phase-out.

Guidance read

FY27 revenue target of ~₹56,000 crore (ex-Vivo): Management targets ~₹56,000 crore revenue for FY27, implying 15-17% growth, assuming flat mobile volumes and excluding Vivo JV. IT hardware revenue >₹4,000 crore in FY27: IT hardware segment expected to grow 3x to over ₹4,000 crore in FY27, driven by strong order books and new customer wins. Telecom revenue target of ₹7,500-8,000 crore in FY27: Telecom and networking segment targets ₹7,500-8,000 crore revenue in FY27, up from ₹5,000 crore in FY26. Lighting revenue to double to ~₹1,700 crore in FY27: Lighting segment expects 2x revenue growth to ~₹1,700 crore in FY27, driven by JV with Signify and export orders.

Risk read

Key risks include Vivo JV approval delay — The Vivo joint venture approval is pending with the government, which could delay a significant volume and revenue opportunity.; PLI expiry margin pressure — The expiry of PLI schemes for mobile phones will pressure margins by 50-70 bps, partially offset by operational efficiency and backward integration.; Memory price inflation impacting demand — Rising memory chip prices have increased smartphone ASPs, leading to softer consumer demand and flat volumes in the mobile segment.; PLI receivable uncertainty — ₹1,380 crore of PLI receivables are pending from the government, with a note in accounts highlighting potential risk if budget allocations are insufficient..

Promise ledger

Scorecard data is being built as historical quarters are processed.