HCLTech Shares Fall Over 4% After Q1 Profit Slump, Restructuring Plan Announced Amid Margin Pressure

Key Highlights:

- HCLTech Q1 profit falls 9.7 percent due to higher costs and client bankruptcy.

- Stock drops over 4 percent following earnings announcement.

- Restructuring plan launched to regain 18–19 percent margins and improve agility.

Mumbai: Shares of HCL Technologies fell over 4 percent on Tuesday after the company reported a drop in its June quarter profit. The stock fell to Rs 1,550.50 on the BSE and Rs 1,550 on the NSE, marking a decline of more than 4 percent.

The company's consolidated net profit declined by 9.7 percent for the quarter ending June 2025, mainly due to higher costs and a one-time loss caused by a client's bankruptcy.

What Hurt the Company’s Profits

HCLTech posted a net profit of Rs 4,257 crore in the June 2024 quarter. However, due to rising expenses, outsourcing costs, employee benefits, and financial charges, the company's profit took a hit this time. The overall expenses rose 9.2 percent, reducing the profit margin.

Even though the company’s revenue rose 8.1 percent to Rs 30,349 crore, the increase in costs outweighed the revenue gains.

Restructuring Plan to Improve Margins

CEO and MD C Vijayakumar said the company will begin a restructuring plan starting this quarter to help bring back margins to the 18 percent–19 percent range.

This plan includes:

- Reducing underutilised office spaces, mostly outside India.

- Scaling down staff in certain overseas locations.

- Implementing structural changes to make the company more agile and aligned with AI and tech-driven market demand.

- These changes will involve extra short-term costs, which the company has already included in its updated financial guidance.

Updated Revenue Outlook

Despite the profit decline, HCLTech raised the lower end of its full-year revenue growth guidance, indicating confidence in upcoming client deals and stronger performance in the next few quarters.

Vijayakumar said that the first quarter is usually the weakest for the company. Still, the overall business environment remained stable, contrary to fears of a slowdown earlier in the quarter.

Investor Sentiment and Market Reaction

The weak profit numbers, combined with news of upcoming restructuring and added costs, worried investors, resulting in a sharp fall in the stock price during early trading on Tuesday.

HCLTech’s performance is being closely watched, especially as IT companies adjust to changing global tech demand and rising interest in AI solutions.

(With PTI Inputs)

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