HCLTech vs Infosys 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.

IN

Infosys

Q4 FY26 · Diversified

Infosys reported Q4 FY26 revenue growth of 4.1% YoY in constant currency, with full-year growth of 3.1%. Large deal TCV reached $15 billion for FY26, up 24% YoY, with Q4 at $3.2 billion. Operating margin was 20.9%, down 30bps sequentially due to acquisition amortization and compensation costs, partly offset by currency and Project Maximus benefits. Management guided FY27 revenue growth of 1.5%-3.5% CC and operating margin of 20%-22%, citing AI services momentum but also headwinds from a European manufacturing client ramp-down and onsite mix shift. Key risks include competitive intensity driving productivity pass-throughs and macro uncertainty delaying discretionary spending.

Guidance read

FY27 Revenue Growth 1.5%-3.5% CC: Constant currency revenue growth guidance for FY27, including contributions from recent acquisition Status but excluding others. FY27 Operating Margin 20%-22%: Operating margin guidance for FY27, with headwinds from wage hikes, productivity pass-throughs, and AI investments offset by Project Maximus. Fresher Hiring ~20,000 in FY27: Plan to onboard approximately 20,000 college graduates in FY27, similar to FY26, with flexibility based on demand. Effective Tax Rate 29%-32% for FY27: Expected effective tax rate range for FY27, reflecting normal operations.

Risk read

Key risks include Productivity Pass-Throughs from AI — Competitive intensity may force Infosys to pass AI-driven productivity gains to clients, compressing revenue growth.; European Manufacturing Client Ramp-Down — A large European manufacturing client is reducing spend due to macro challenges and Infosys' decision to walk away from a low-return deal, impacting FY27 growth by 75-100bps.; Onsite Mix Shift Impacting Revenue — Continued reduction in onsite mix (40-50bps exit trajectory) will lower reported revenue growth, partly offset by offshore benefits.; Macro Uncertainty and Tariff Risks — Geopolitical conflicts and trade policy shifts could delay client decision-making and discretionary spending, especially in manufacturing and retail..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.