The June quarter results of two major Indian IT companies, Tech Mahindra and HCL Technologies, have drawn fresh attention to the ongoing slowdown in the global technology services industry. Both firms released their Q1 FY26 earnings this week, showing signs of pressure amid an uncertain macroeconomic environment and continued weakness in technology spending, especially in the United States.
Tech Mahindra reported a marginal decline of 0.2 percent in its consolidated revenue on a sequential basis, clocking in at just over 13,350 crore rupees for the quarter ending June 2025. Net profit was also down by one percent quarter on quarter at 1,128 crore rupees. While the revenue figures were flat, the company managed to expand its operating margin by 50 basis points to 14.5 percent, mainly by keeping a tighter check on employee costs.
On the other hand, HCL Technologies posted revenue of 30,349 crore rupees for the same period, marking a 0.8 percent drop in constant currency terms compared to the previous quarter. Its core operating margin came in at 19.9 percent, which was a fall of 150 basis points from the March quarter. Net profit also took a significant hit, declining by 10.8 percent to 3,844 crore rupees. Despite the dip, HCL has revised its full-year growth outlook slightly upward, now expecting three to five percent growth in constant currency terms for FY26.
Deal wins, a key indicator of future revenue potential, told a mixed story for both companies. Tech Mahindra secured new deals worth 809 million dollars, a slight improvement from the 798 million reported in the previous quarter. HCL Technologies, however, reported a steep drop in its deal wins from 2.99 billion dollars in March to 1.81 billion in June, suggesting a more cautious spending environment among global clients.
The backdrop to these results includes broader concerns about reduced IT spending in global markets, particularly the United States, which continues to be affected by the trade tariff agenda under the Trump administration. With many clients reassessing budgets and postponing digital transformation projects, Indian IT majors are finding it harder to grow revenues at the pace they once did.
On Dalal Street, investor sentiment has been mixed. Tech Mahindra shares ended Wednesday with a 1.9 percent gain at 1,609 rupees, a notable recovery from its 52-week low of 1,209.7 rupees touched in April. HCL Technologies shares closed slightly lower at 1,562.9 rupees but remain well above the April low of 1,304 rupees. Still, analysts suggest that cautious optimism is the prevailing mood, with many investors choosing to wait for clearer signs of demand recovery before making fresh bets.
Valuation metrics provide more insight into the market’s expectations. Tech Mahindra currently trades at nearly 32 times its estimated FY26 earnings, while HCL Technologies has a lower price to earnings multiple of around 25 times. This difference partly reflects the belief that HCL’s diversified services and stronger deal pipeline may offer better near-term stability.
As of now, Tech Mahindra has not provided a specific growth forecast for the current financial year. This leaves investors relying on quarterly performance trends and broader sector cues to make decisions.
The bottom line is that the Indian IT sector continues to grapple with subdued demand and evolving client needs. While both Tech Mahindra and HCL Technologies have their strengths, the road ahead is likely to remain bumpy. Investors may need to exercise patience and look for signs of structural improvement in the sector before making long-term commitments.
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