Nifty IT jumps 4.5% as HCLTech Q4 FY25 profit rises

Nifty IT rallies on earnings-led sector sentiment

The Nifty IT index climbed over 4.5% on April 23 as sentiment improved across Indian software services stocks after HCL Technologies reported its March quarter (Q4 FY25) results. The move underlined how closely sector positioning can swing after large-cap earnings, especially when brokerages describe numbers as largely in line with expectations. HCLTech’s update included growth in year-on-year profit and revenue, but also showed pressure on margins and a sequential dip in net profit. Even with those mixed cues, the market reaction was decisively positive during the session. Investors also tracked HCLTech’s dividend announcement, which pushed attention to cash returns in a volatile demand backdrop.

What HCLTech reported for Q4 FY25

HCL Technologies reported consolidated net profit of ₹4,307 crore in Q4 FY25, up 8% year-on-year from ₹3,986 crore in Q4 FY24. Revenue rose 6% year-on-year to ₹30,246 crore from ₹28,499 crore in the year-ago quarter. Sequentially, the company’s net profit declined about 6% quarter-on-quarter, while revenue increased 1% quarter-on-quarter. The quarter’s results were framed by brokerages as broadly within expectations, but with a sharper-than-expected margin compression. The company also disclosed dollar revenue of USD 3,498 million, down about 1% quarter-on-quarter and up 2% year-on-year.

Stock reaction: HCLTech leads the sector higher

HCLTech shares rose as much as 8.11% intraday to ₹1,600 per share on the NSE. The strength in HCLTech was followed by gains in other large and midcap IT names, helping lift the index. The broad-based participation suggested that investors treated the update as a sector read-through rather than a stock-specific move alone. With most frontline IT companies being widely owned by domestic institutions and global funds, earnings revisions and management commentary tend to be priced quickly. On April 23, the market’s immediate focus remained on reported numbers, contract momentum, and dividend visibility.

Brokerage read-through: “In line”, but margins watched closely

Nuvama Institutional Equities said HCLTech’s Q4 results were largely in line with expectations. It noted reported revenue of USD 3,498 million and said the constant currency (CC) decline of 0.8% quarter-on-quarter closely matched both the company’s estimate of a 0.7% fall and the Street’s estimate of a 0.5% decline. Nuvama also flagged that IT services revenue grew 0.7% quarter-on-quarter in CC terms.

Elara Securities, in its note, said the roughly 1% sequential revenue drop was expected in a seasonally weak quarter. However, it added that the EBIT margin decline of 150 basis points quarter-on-quarter was sharper than anticipated. The margin line, more than the revenue line, is often where investors look for early signals of pricing power, utilization, and cost control.

Margin and operating performance: EBIT at 18%

HCLTech’s EBIT margin for the quarter was 18%, down 150 basis points from the previous quarter, which Nuvama said was in line with forecasts. Separately, the company’s EBIT for Q4 FY25 was reported at ₹5,442 crore. This was up 8.4% year-on-year versus ₹5,018 crore in Q4 FY24 and down 6.5% quarter-on-quarter from ₹5,821 crore in Q3 FY25.

Management also said it delivered on FY25 guidance with revenue growth of 4.7% in constant currency terms and an EBIT margin of 18.3% for FY25. These disclosures helped investors place the Q4 margin dip within the context of full-year delivery.

Deal wins and TCV: contract momentum stays strong

A key positive highlighted by brokerages was deal activity. Nuvama said total contract value (TCV) in Q4 FY25 was USD 2,995 million, up 43% quarter-on-quarter and up 31% year-on-year. Separately, new deal wins were also described as USD 3,000 million for the quarter, and FY25 TCV was cited at USD 9,268 million (also referenced as USD 9,300 million).

The company also pointed to specific wins, including a strategic partnership with Western Union and a partnership with a Fortune 50 telecommunications company focused on network performance. Deal disclosures matter for IT services firms because revenue conversion typically lags signings, and the mix and duration of contracts can influence near-term growth visibility.

Dividend: ₹18 interim payout, FY25 total at ₹60

HCLTech’s board declared an interim dividend of ₹18 per share. This took the company’s total dividend payout for FY25 to ₹60 per share. At a share price of ₹1,593.50 as of 12:15 PM, the dividend yield was stated at 3.76%, among the higher yields within the IT sector.

The company also disclosed that the record date for this interim dividend was April 28, 2025, with payment scheduled for May 6, 2025. It also said this marked its 89th consecutive quarter of dividend payout, and a full-year payout ratio of 93.5% was referenced.

Guidance for FY26: growth and margin bands

HCLTech guided for revenue growth of 2% to 5% year-on-year in constant currency terms for FY26, with the services segment also expected to grow 2% to 5% in constant currency. It also guided for an EBIT margin range of 18% to 19% for FY26. These ranges provide a framework for analysts modelling earnings, particularly when the demand environment is described as uncertain.

How other IT stocks moved in sympathy

The positive commentary and the sector-wide interpretation of HCLTech’s update supported broad gains. Infosys shares rose over 4%, while TCS gained over 3%. Tech Mahindra and Wipro were up by around 4% each. Midcap IT names also traded higher, with Persistent Systems, LTIMindtree, Coforge, Mphasis and Oracle Financial Services Software showing gains in the 4% to 7% range.

Key numbers at a glance

Why the move matters for investors

The April 23 rally showed how quickly IT stocks can re-rate when a large company’s numbers reduce downside fears, even if some metrics like margins weaken sequentially. The mix of “in-line” results, strong contract value, and a high dividend yield helped shape a supportive near-term narrative for the sector. At the same time, the sharper margin decline noted by Elara underscores that profitability remains a key monitorable, particularly when demand is uneven and quarters can be seasonally soft.

Conclusion

Nifty IT’s more than 4.5% rise on April 23 came as HCLTech’s Q4 FY25 results, deal activity and dividend announcement improved sentiment across large and midcap IT stocks. Markets will next track the interim dividend timeline, FY26 execution against the 2% to 5% constant currency guidance, and whether margins stabilise within the 18% to 19% band.