Thank you very much. Our first question comes from the line of Abhishek Pathak from Motilal Oswal. Please go ahead.

Yes, hi team. Thanks , and congrats on another good quarter. So , I got a couple of questions. Firstly, when you talk to clients right now versus exactly this time last year, what differences do you see in conversations? Are we moving towards more serious discussions around AI implementation? What is impeding clients from getting there? Are we indicating that some foundation, that will begin maybe in the next 3 -4 months ? Just trying to understand the YoY colour and how is it different versus the same time last year? That's one. Second question and related, of course . In which service lines do you think is the client coming in and saying that earlier, we were constrained by budgets, but now that AI is helping us immensely , we can really unlock and maybe do a lot more of something we weren't doing at all? That's the second question. And lastly for S hiv, if you can p art a brief update on how much more restructuring charges are pending? And update on the SG&A investments as well, whether they should continue into Q4, or how should we model that in? Thank you, that's all from my side.

Thank you, Abhishek. So let me take the first couple of questions, then I'll hand it over to Shiv. On the AI conversations last year to this year, definitely, there is a lot more holistic conversation on how AI would change the entire organization. I think last year, we were still talking significantly about point solutions and trying to prove that AI can deliver some meaningful value. But then after that, the conversations changed to how clients should be focusing on some of the foundational elements like data and cloud migration. But this conversation has matured to an extent that clients realize that to get holistic benefit, they need to completely reimagine their business processes. Once that realization is there, then the deployment of AI also slows down a little bit because clients want to take a holistic approach. However, the biggest area where we are seeing good outcomes and good client interest is- delivering an accelerating software development, data life cycle management. That area is undisputedly the sweet spot for Generative AI to be most helpful for a lot of organizations. The other broader enterprise adoption for business processes is going to revolve around significant process transformation. So, to that extent, it is a little bit muted. Now, where clients are talking about more and which service line. If you really see the enterprise adoption , revenue and spend from that perspective, it is still not very high. It's still very, very small. The real acceleration in what we are seeing is not necessarily in deploying AI within enterprises, but really “Day -1” services, which are foundational for enabling AI, like a lot of work in our engineering services. Like I mentioned about custom silicon for edge inferencing It is a big area w ith a lot of companies across multiple industry verticals. This is not restricted to semiconductor industry. Everybody who's got products and solutions, if they needed to use the regular GPU architecture for edge inferencing, it's going to be unviable. So, they're looking at custom chips to be a big spend area to get the best ROI out of the AI spend. And similarly, for a lot of technology companies, the AI factory, which is largely the AI data centres, the professional services around design, implementation, operations, support managed services. We talked about a large client who's a Top 10 technology company. They continue to expand as their capex spend is expanding. We have acquired another Top 10 technology company for the same AI Factory services. Those are the areas, which are “Day -1” of AI, where we are seeing very good traction, especially for Advanced AI services. And for the question on the restructuring?

Abhishek, if you recall, we have indicated that for the full year, we will have an impact of 50 basis points on our margins. This is a one -off restructuring cost this year. And we expect the similar kind of impact in Q4 also. Our endeavour is to finish this exercise by Q4 and start the new financial year on a clean state. So, I expect a similar kind of charge in the Q4 also. And, on the SG&A part, we will continue to invest on the AI solutions as well as on the GTM.

Got it. Thank you and all the best.

Thank you. We have our next question from the line of Ravi Menon from Macquarie. Please go ahead.

Congrats on a good quarter. Just wondering about the Retail vertical performance. Seasonally, normally, Q3 is not great for Retail, but this quarter you showed really strong performance. And you also talked about a mega deal win there. Has that already started contributing this quarter?

No, there is no contribution from the mega deal this quarter. It will start ramping up in the current quarter. And retail is really coming from a number of wins. In a couple of large clients, where we have won business in the previous quarters, they are getting into execution.

Thanks, CVK. And you've also seen in Q3, there was good performance in the Software segment. Last year, we had a slight decline YoY for Software products. Is this a sign that customer spending is starting to pick up again on annual maintenance contracts? And they're starting to open up wallets again for IT spending?

I don't think this is reflective of broader IT spending. We have the seasonality, which has driven strong growth. There is a very strong demand for data intelligence portfolio. Zeenea, coupled with Actian's existing portfolio, is a very compelling offering, and we are able to replace several of the incumbents, and we have some good success stories. So that is scaling up. And overall, data portfolio continues to do very well. And very significant couple of wins w ere also on our marketing automation platform, especially with the clients who are looking at sovereign solutions rather than a public cloud solution. Those also contributed to some meaningful wins.

Thank you, CVK. One last one for me. With such strong deal wins over the last nine months, why is the guidance still implying a slight decline in the lower end of the guidance for Q4 for services?

So, we have to give a range, right? We can't give such a precise range. So, we took a 0.5% range, which I think is very reasonable. So that's where we landed. We have certain calculations, which leads to the guidance, which is optimistic, pessimistic and all that. And then after that, it gets rounded to some reasonable number.

Thanks so much. Best of luck.

Thank you.

Thank you. The next question is from the line of Sudheer Guntupalli from Kotak Mahindra Asset Management Company. Please go ahead.

Hi, CVK. Congrats on a great quarter. My question is the existing data centre infra has to be repurposed or upgraded for AI use cases like inferencing or model training because of the capacity constraints globally. How does that feed into demand for our IMS segment? And when you talk about “Day -1” kind of opportunity, is this already playing out in some form and fashion?

Yes, it's a very significant opportunity for our infrastructure business. We believe in the next five years, the entire installed base of private data centres will get technology refreshed. However, we haven't started seeing much of traction yet on that front. But this is something we expect will be a good growth driver. The “Day -1” on infrastructure business is largely with the technology companies who are building planet-scale data centre capacities to support their AI workloads. That's where we are seeing. That's why I call it a “Day -1”, which is infrastructure required to enable AI. There is some traction on the edge as well. So that is also an opportunity in the AI Factory offerings.

Got it, sir. And just one question on margins to Shiv. ER&D has shown very good growth; the sequential margin drop seems to be a bit surprising. Is that largely because of the restructuring costs going into that head?

Yes, that's correct. If you take out the impact of restructuring costs, then the margins were 17.6% versus 18% last year . And this quarter, there's around 90 basis point impact of wage hike we had given and also another 30-40 basis point of furloughs. So that's what caused the slight dip in the margins.

Fair enough, sir. Thanks, and all the best.

Thank you. The next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.

Yes. Hi. Thanks for taking my question. And congrats on a very solid performance in, what is likely, a very soft quarter. CVK, my question was mainly on the manufacturing vertical. This vertical has been under the tariff uncertainty h it as well as the auto vertical has also been taking a lot of headwinds for entirely different details , in the U.S. and Europe. How do we see the composition in this vertical with the clients? If you could break up your answer into non-auto part of manufacturing- how is that looking? Do you expect the tariff uncertainty to come down and growth to pick up in the coming quarters? And then secondly, on the auto sub -vertical, how are we looking at it? And do you think the pain is going to continue in terms of the EDR option for the challenges that the auto OEMs are facing in different sub-verticals?

Yes. So, in manufacturing vertical, of course, we have 3 major components. One is the mobility vertical, which is the auto and travel transportation. The second is traditional industrial manufacturing and third is aero and defense. We are seeing good traction in aero and defense, and that has contributed to some of the growth. In the mobility segment, especially in the engineering services, we are seeing stability coming but it's still a little early to call out if there is secular growth in this segment. That is all I want to call out.

And in the traditional engineering segment that you mentioned, the manufacturing part of it?

Yes, manufacturing, I think it is still a little bit muted, I would say.

Got it. And the tariff uncertainty would still be there for most of these companies?

Yes. Yes.

Got it. Sure. That's great. Just my last question to Shiv. Shiv, you mentioned that we are looking to basically take the entire impact of restructuring in Q4, and a similar kind of impact can be seen as we saw in this quarter. So, beyond that, are we basically looking at possibly going back to over 18% to 19% margin guidance range in FY27? Or would you like to take this comment later on in Q4?

As regards to O ND’25 performance, if we normalize the restructuring cost, the margins were 19.4%, versus 19.5%. That's a very healthy sign that structurally, there's no issues with the margins. But for the next year, we'll update you in April on what sort of guidance we want to give, but I would not like to call out the margins for next year now.

Got it. I appreciate your comment on that. I think that's all from us. I have no further questions from you. Thank you so much for taking my questions and wish you all the best.

Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead.

Yes, thanks. Thanks for the opportunity and congrats on a very strong set of numbers across many attributes. Sir, the first question is in terms of commentary about ACV being highest in the four years, as well as if I look at your services growth guidance on the 4Q exit at the upper end, you will have a strong exit in services in Q4 of this year versus Q4 of last year? I'm not asking for guidance, but if there are no further macro negatives, directionally you believe the organic services growt h could be better in the next year versus last year. And just related to that, this can also fill ip if clients try to increase the investment on the AI adoption more on system integration phase rather than just on the capex side?

Yes, as you would see, we are on track to be the fastest growing large cap services company for the fourth year running. Our all -weather portfolio continues to deliver, capturing the pockets of discretionary spend available in the market. And we remain very confident to meet the ever -changing needs of our clients during this exciting times. Would FY27 see faster growth than this year, let's wait until April to see where we are able to end the year. And then we can discuss. The integration- right now, we are looking at a lot more traction in “Day -1” and some service offerings across all verticals and some very specific to the Tech vertical. But the general AI adoption trend is there across the board, and we see that incrementally growing as clients make up their mind to holistically transform their business processes. That's when this trend will be really meaningful. Otherwise, it largely traditional deals, but fuelled by AI -Led transformation of the IT operating model, Software Development, Data Lifecycle Management. That is the biggest differentiator, which is driving some better wins. In fact, all the 4 of our largest deals were by our AI Force 2.0 Agent platform. So that's where we are heading.

Yes. Sir, just last couple of questions. In terms of TCV last quarter earnings, you said you target now $10 billion new business TCV, which could have some volatility on QoQ. And you have also closed $3 billion in this quarter, last quarter on $2.5 billio n, so looking at the pipeline and the closure, you still believe plus or minus $2.5 billion could be a new normal going forward, at least in the near term per quarter?

See, I mean, as you called out, these bookings can be spiky. And if you take our last 4 quarters, we have delivered $10 .4 billion net new booking. Now I would not really call out that every quarter we are going to go above $2.5 billion. But if you take some kind of a moving average over 3 quarters, 2 quarters, then I think we should be hitting that number. That's what I expect.

Sir, just last thing on the press conference, we have said the incremental recurring impact because of the labor law could be now just 10 or 20 bps. So that means the further hit on a recurring basis may not be higher than 10 or 20 bps. Am I wrong in understanding this?

No, your understanding is correct. We have already taken the one -off charge in the P&L. And going forward, we don't expect this to be more than 10 to 20 basis points on a recurring basis.

Barring any further changes in the labour code regulation. Some of them are still pending clarifications.

Thank you. Our next question is from the line of Manik Taneja from Axis Capital. Please go ahead.

Yes. I just wanted to pick your thoughts with regards to the demand around legacy modernization using AI. Are you seeing this segment is a significant interest from customers across verticals? And how do you think this contributes to growth over the foreseeable future?

Yes. As I said, in modernization and SDLC is where the biggest opportunity is in the enterprises. And we are seeing good demand. I mean, obviously, these projects also clients take one segment of modernization, see success of that, and then continue to scale. We think this will become a very big opportunity if you take a next 2 to 3 year window, legacy modernization using AI will be a very significant opportunity across most verticals. Some verticals have a lot more enterprise ERP and SaaS type of large footprint around. But there are certain verticals- financial services, telecom, healthcare who are all on mostly custom software- will be a significant opportunity.

Great. Thank you and all the best for future.

Thank you. Our next question is from Nitin Padmanabhan from Investec. Please go ahead.

Yes. Hi, good evening and wishing you a very Happy New Year. I had a question related to the products business. This quarter, after many, many quarters, we have seen the perpetual license upfront sort of see significant revenue accretion. Usually, that's been on a downtrend as we shifted to subscription. I wanted your thoughts on how we should think about this, any change in strategy or this was opportunistic?

You should compare the perpetual license revenue in December last year to December this year. It's only a marginal uptick. Usually, seasonality is there and some incremental quantities. If some clients were a hell bent on continuing on the perpetual license, so we continue with that. And this time, we saw one client who really wanted it to be perpetual sovereign type of requirement, which helped this revenue go a little higher than what it was last year December. I think it was $49 million, which has become $55 million. Otherwise, our general approach is to minimize perpetual and convert as much possible to term and subscription.

Got it. And 1 last on the products / Will Actian be amongst your top three products right now by revenue?

Yes, of course.

Yes, sure. Perfect. Thank you. All the very best.

Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to Mr. C. Vijayakumar, CEO and MD for closing comments. Over to you, sir.

Yes. Thank you, everyone, for joining our call. I know it's late in the evening. I really appreciate all of you taking time to join. We continue to remain quite confident of the growth trajectory. We've delivered two outstanding quarters. We've delivered very good booking, and we have a strong pipeline. We remain optimistic about the overall progress, overall growth potential of our business. And we look forward to talking to you in the subsequent calls. Thank you very much. Have a good evening.

Thank you. On behalf of HCLTech, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. (This document has been edited for readability and is not a verbatim record)