HCLTech vs KPIT 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

Scorecard data is being built as historical quarters are processed.

KP

KPIT Technologies

Q4 FY26 · Information Technology

KPIT reported a muted FY26 with Q4 constant currency growth of 1.8% QoQ, but highlighted $349M in deal wins and 18% YoY growth in trucks & off-highway. Two large SDV programs are ramping down, creating a ~4-5% sequential revenue gap in H1 FY27, partially offset by new account wins. Management guided FY27 EBITDA margin of 20.5-21.2% despite increased AI investments, and medium-term margin expansion to 22-24% driven by solutions/products mix shift to 50% of revenue. Key risks include further program cancellations (e.g., Honda) and macro headwinds from tariffs/geopolitics. The company is expanding into India, China, and micromobility, but near-term growth remains uncertain.

Guidance read

FY27 EBITDA margin guidance of 20.5-21.2%: Despite increased investments in AI, solutions, and new markets, management expects EBITDA margin to improve modestly. Medium-term EBITDA margin target of 22-24%: Driven by higher share of solutions and products (target 50% of revenue in 3 years) and fixed-price contracts. Solutions & products revenue to grow 30% YoY in FY27: Management expects 30%+ growth in this segment, which currently represents ~15% of revenue. India revenue to double in FY27: India currently ~4% of revenue; management expects strong growth driven by local OEMs and global OEMs' India-for-India strategy.

Risk read

Key risks include Unexpected program cancellations (e.g., Honda) — Honda cancelled all new platform programs, impacting KPIT's revenue. Management noted this was a surprise and will affect H1 FY27.; Delays in middleware and autonomous driving programs — New architecture programs have been pushed out, leading to lower-than-expected revenue in these areas. Recovery may take 1-2 years.; Competition from Chinese automotive R&D firms — Analyst raised concern about Chinese competitors with high R&D spend and negative EBITDA margins. Management acknowledged competition but believes KPIT's localized solutions and ecosystem give it an edge.; Macro headwinds from tariffs and geopolitical conflicts — Management noted that if current conflicts persist beyond 3-6 months, they could impact OEM spending, especially in the truck segment..

Promise ledger

Scorecard data is being built as historical quarters are processed.