India’s IT industry monitors market responses to the Q1FY26 data. Despite HCL’s revenue growth, which is tainted by profit reduction and margin difficulties, analysts choose TCS over HCL Technologies because of TCS’s superior margins and growth.
HCL Tech vs TCS Q1 FY25: Which Stock Should You Pick Today?
India’s leading IT businesses will be the focus of today’s market session after the announcement of financial results for the April-June quarter of fiscal year 2025-26 (Q1FY26). hcl share price Following their most recent Q1FY26 earnings release, market analysts favor Tata Consultancy Services (TCS) over HCL Technologies Ltd as investors on D-Street consider which IT companies to purchase, sell, or hold at this time.
Q1 Results
Due to higher costs and the one-time impact of a client’s bankruptcy, HCL Technologies reported a 9.7% drop in its consolidated net profit for the June quarter on Monday, July 14. According to a regulatory filing, the company’s net profit (attributable to the firm’s owners) for the same time last year was ₹4,257 crore. Revenue from operations climbed 8.1% to ₹30,349 crore for the reviewed quarter, from ₹28,057 crore in Q1FY25.
The company’s operating margin of 16.3% was below their estimates, according to their report. Even though Q1 has always been their worst quarter, a decline in utilization brought on by delays in a certain program’s ramp-up was the main reason for the lower-than-expected operating profit.
On Monday, the BSE saw a 1.04% decline in the price of HCL Tech shares, closing at ₹1,619.95 per share. After trading hours ended, the financial results were made public.
TCS reported a 6% increase in its June quarter net profit of ₹12,760 crore on Thursday, July 10. The Tata group company declared a net profit of ₹12,040 crore for the same time last year.
Although the company’s sales decreased by 3% when assessed on a constant currency basis, it increased by 1.3% to ₹63,437 crore from ₹62,613 crore during the same period last year.
The operational profit margin for the April-June period was 24.5 percent, up 0.30 percent from the previous quarter, according to a corporate statement.
Results of HCL Tech vs. TCS Q1: What experts think
Following Q1 FY26 earnings, TCS is unquestionably the more attractive IT investment, supported by a strong margin profile, consistent profit growth, and strong contract wins, according to Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund. Even while HCL Tech is still showing long-term promise, current challenges with margins and deal execution call for a cautious approach before investing more money.
Nevertheless, Gulati continued, “both businesses have demonstrated exceptional resilience over decades of business cycles — navigating global shocks, tech shifts, and macro volatility — a testament to the enduring strength of India’s IT backbone.”
Similarly, TCS is a better option, according to Vinit Bolinjkar, Head of Research at Ventura Securities, as it was able to hold onto its margins and some of BSNL’s orders are anticipated to arrive in the upcoming quarter. HCL Tech’s profit margins significantly declined.
In a thorough analysis, Bhavik Joshi, Business Head, INVasset PMS, thinks that while both TCS and HCL Technologies had strong Q1 FY26 earnings, there are some significant differences between their future directions. Despite the continuous decline in global demand, TCS has shown resilience with its strong margin leadership of 24.5% and industry-best cash conversion.
Even while short-term visibility is still muted, the company’s strategic focus on AI and a robust transaction pipeline, along with its $9.4 billion order book (+13% YoY), give a strong basis for long-term development. TCS is clearly the more conservative option for investors looking for stability, steady margins, and robust cash flow.
However, because to its cloud and digital capabilities, HCL Technologies outperformed TCS with a robust 8% YoY revenue increase. However, because of considerable expenditures in Go-to-Market methods and Generative AI, the company’s operating margins have dropped to 16.3%, indicating severe margin pressures.
As HCL Tech looks to capitalize on future AI usage, this raises the risk-reward situation. However, the company’s short-term profitability issues—net profit fell 9.7% YoY—need to be taken seriously.
In conclusion, HCL Tech provides greater growth potential but more volatility because of its aggressive digital and artificial intelligence expenditures, whilst TCS offers a safer, margin-driven play with superior short-term visibility. TCS is still the best choice for people who value stability and margin leadership, but HCL Tech may appeal to those who are prepared to take on a little more risk in return for more growth potential,” Joshi continued.
