HCL & TCS Q3HY26 Results: IT Sector in Trouble?
Check if you are an investor in Indian IT companies
For years, Indian IT was the comfort sector. Predictable growth, steady margins, and reliable cash flows. That comfort is now missing. Over the last two quarters, earnings have made one thing clear: demand visibility is weak, decision-making by clients is delayed, and growth has slowed more than most investors expected. This newsletter looks at what the latest quarterly results are really telling us, beyond headlines and management commentary.
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HCL Q3FY26 Results
HCL Technologies Ltd’s Q3 FY26 consolidated net profit declined 11% on-year to Rs 4,076 crore, the IT firm announced on January 12.
Consolidated revenue increased 13.3% from a year earlier to Rs 33,872 crore in the quarter ending December 31. In constant currency (CC) terms, the firm’s revenue grew 4.8 percent YoY.
HCLTech said its AI revenue came in at $146 million, up from $100 million in the previous quarter. Revenue from the company's banking and technology verticals rose by 8.1% and 14.4%, respectively, while that from life sciences fell 2% during the quarter.
What are brokerages saying - HCL Tech?
Nomura - Target raised to Rs 1,810 from Rs 1,790
Analysts have revised their FY26-28F earnings per share (EPS) by 1-4% and think HCLTech’s strategy to remain asset light while focusing on services in the GenAI world is a step in the right direction.
Motilal Oswal Financial Services - Target raised to Rs 2,200 from Rs 2,150
The brokerage expects HCL Technologies to deliver a compound annual growth rate (CAGR) of 6.7%/8.9% in USD revenue/INR profit after tax (PAT) over FY25-28.
“The company remains the fastest-growing large-cap IT services firm, and we like its all-weather portfolio. We have largely kept our estimates unchanged,” Motilal Oswal said.
Q3 services growth of 5 per cent year-on-year (Y-o-Y) constant currency (CC) and an upgrade in FY26 services guidance to 4.75-5.25% CC places HCLTech among the fastest-growing largecaps, implying 1.7 per cent Q-o-Q organic growth in Q4 despite seasonality, the brokerage said. It expects growth rates to accelerate to 6 per cent Y-o-Y in IT services in FY27E.
TCS Q3FY26 Results
TCS reported a 14% year-on-year (YoY) decline in consolidated net profit for the December quarter at Rs 10,657 crore, compared with Rs 12,380 crore in the year-ago period. The profit after tax (PAT) is attributable to the company’s shareholders.
Revenue from operations in Q3 rose 5% YoY to Rs 67,087 crore, up from Rs 63,973 crore in the corresponding quarter of the previous financial year.
TCS’ bottom line declined 12% sequentially from Rs 12,075 crore in Q2, while its topline rose 2% compared with Rs 65,799 crore in the July–September quarter.
The company announced an interim dividend of Rs 57 per equity share for FY26, comprising a third interim dividend of Rs 11 per share and a special dividend of Rs 46 per equity share.
What are brokerages saying?
Most brokerages stayed cautious, sticking to neutral or hold ratings as near-term visibility remains weak. Citi continued with a bearish view on the stock. CLSA was the clear outlier, taking a more positive stance, backed by stable margins, a strong pickup in AI-driven revenue, and management’s confidence of better growth in CY26.
Personal Views
(Not a recommendation)
For Indian investors, the latest results from Tata Consultancy Services and HCL Technologies make one thing clear: this is not a sector in trouble, but it is a sector in transition. Growth has slowed, deal closures are taking longer, and near-term visibility remains limited, but margins are holding up better than feared and large clients are still spending selectively. This is a phase where patience matters more than predictions.
Chasing a quick rerating could disappoint, while writing off IT entirely could mean missing the eventual recovery. For long-term investors, the focus should shift from quarterly noise to balance sheet strength, deal pipelines, and the ability to adapt to AI-led demand. The IT sector may not deliver excitement right now, but it is quietly testing investor discipline, and those phases often decide long-term returns.
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