Segment Reporting in Quarterly Results: How to Read Business-Wise Revenue and EBIT

Segment reporting in quarterly results is where a company breaks its revenue, profit and sometimes assets down by business line. It’s how you find out which division is really doing the work on growth and margins. The headline tells you how the whole company did. The segment table tells you why. Here we go through what Indian accounting rules require, how companies choose the segments they report, how to read business-wise revenue and EBIT, and then a worked example built on HCLTech’s Q2 FY27 investor release.

Segment analysis is only one step in reading a quarter, so keep our guide on how to analyse quarterly results of a company handy as you go. Segment numbers also sit well with our explainer on operating leverage in quarterly results. A division with heavy fixed costs can move the group margin much more than its share of revenue would suggest.

What is segment reporting in quarterly results?

Indian companies that follow Indian Accounting Standards report segments under Ind AS 108, Operating Segments, notified vide G.S.R. 111(E) dated February 16, 2015. The heart of it is simple. A company must disclose enough for readers of its financial statements to judge the nature and financial effects of the businesses it runs and the economic environments it operates in.

Ind AS 108 is India’s version of IFRS 8, Operating Segments. Its appendix lists a handful of differences from IFRS 8, such as transitional provisions, terminology and the scope paragraph, since in India applicability is set by the Companies Act and its rules. The idea is the same everywhere. Investopedia’s explainer on business segment reporting calls it breaking out a company’s financials by division to make things more transparent, and notes that under US GAAP a segment has to be reported if it makes up 10% of total revenues, profits or assets.

One detail saves investors time. Ind AS 108 says that where a financial report has both consolidated and standalone statements, segment information is needed only in the consolidated ones. So when you’re hunting for the segment table in a results filing, go to the consolidated results first.

How a company decides its segments

Ind AS 108 follows what accountants call the management approach. An operating segment is a part of the company that earns revenue and incurs expenses, whose results the chief operating decision maker reviews regularly to allocate resources and judge performance, and for which separate financial information exists. The standard is clear that the chief operating decision maker is a function, not a job title. It’s often the CEO or COO, but it can just as well be a group of executive directors.

Put plainly, the segments you see should reflect how top management actually runs the business. Two things follow from that:

• Segments differ between companies. One IT company may split by service line, another by industry vertical, and a conglomerate by entirely different businesses. Comparing segment margins across companies only works when the segments describe similar activities.
• Segment profit is the management’s measure. The standard requires each segment item to be the measure reported to the chief operating decision maker. It does not have to match the way the consolidated profit and loss statement is built, which is why the reconciliation lines matter (more on that below).

Not every part of a company counts as a segment. Ind AS 108 points out that a corporate headquarters or certain functional departments may earn no revenue, or only incidental revenue, and so wouldn’t be operating segments. Amounts not assigned to any segment show up as reconciling items when segment totals are tied back to the company’s figures.

The 10% and 75% tests that decide what gets reported

After a company has identified its operating segments, Ind AS 108 applies number thresholds to decide which must be reported separately. A segment is reportable if it passes any one of these tests:

• its revenue, including both external sales and sales to other segments, is 10% or more of the combined revenue of all operating segments;
• the absolute amount of its profit or loss is 10% or more of the greater of the combined profit of all profitable segments and the combined loss of all loss-making segments;
• its assets are 10% or more of the combined assets of all operating segments.

Then there’s a coverage test. If the external revenue of the reportable segments adds up to less than 75% of the company’s revenue, more segments must be reported until at least 75% is covered. Smaller segments that don’t qualify go into an “all other segments” bucket. Management can also report a segment that fails every threshold if it thinks the information is useful, and keep reporting one that has dropped below the thresholds if it’s judged to be of continuing significance.

A hypothetical shows how this plays out. Say a company has four operating segments with revenue of ₹600 crore, ₹250 crore, ₹100 crore and ₹50 crore, so combined segment revenue is ₹1,000 crore. The first three are each 10% or more of the total (60%, 25% and 10%), so they clear the revenue test. The fourth is 5%. It would only be reportable if it passed the profit or asset test, or if management chose to show it. Otherwise it lands in “all other segments”. If all the revenue here is external, the three reportable segments cover 95% of it, well above the 75% floor.

The consolidated numbers tell you how the company did. The segment table tells you which business did it, and whether the rest of the company is quietly getting weaker.

What you’ll find in a segment table

Ind AS 108 requires a measure of profit or loss for every reportable segment. Total assets and liabilities by segment are only needed if those figures are regularly given to the chief operating decision maker. Where they form part of the measure reviewed, the company also has to disclose items such as external revenue, inter-segment revenue, interest revenue and expense, depreciation and amortisation, and income tax for each segment.

Going by what the standard asks for, a segment table in a results filing is made up of four kinds of lines:

• Segment revenue for each business, which can include sales to other segments, so inter-segment revenue has to be eliminated to arrive at the company’s revenue.
• Segment results, the measure of profit or loss for each business that management reviews.
• Reconciling or unallocated items, such as head-office costs that are not assigned to any segment, which bridge the segment total to the company’s own profit figure.
• Segment assets and liabilities, where the company reports them, which let you estimate how much capital each business ties up.

The standard requires total segment revenue, total segment profit or loss and (where reported) segment assets and liabilities to be reconciled to the company’s own figures, with each material reconciling item identified and described. Read those lines carefully. A big, growing unallocable expense can make every segment look fine while group profit goes nowhere.

HCLTech’s Q2 FY27 segments, worked through

HCLTech’s Q2 FY27 investor release, filed with BSE and NSE on October 12, 2026, is a good example of segment data changing the story. The company reported Q2 FY27 revenue of $3,724 million, up 2.0% quarter on quarter and 2.2% year on year in US dollar terms, with an EBIT margin of 18.2%, up 131 basis points on the previous quarter. The release says that margin includes a restructuring cost of 84 basis points.

Revenue is split across three businesses. Below are the revenue mix (each segment’s share of company revenue) and EBIT margin for the quarter ended September 30, 2026, as the release gives them:

Source: HCLTech Q2 FY27 investor release. The release says the inter-segment line relates to HCLSoftware products and services used by the services business.

Step 1: Convert shares into amounts

Multiply the revenue shares by the $3,724 million total and you get approximate segment revenue (our calculation, rounded): about $2,815 million for IT and Business Services, about $626 million for Engineering and R&D, and about $294 million for HCLSoftware. That last number matches the $294 million HCLSoftware total revenue the release reports separately, a handy check that you’re reading the table right.

Step 2: Estimate each segment’s EBIT

Apply each margin to its segment’s revenue and approximate EBIT comes to $524 million for IT and Business Services (18.6% of $2,815 million), $95 million for Engineering and R&D (15.2% of $626 million) and $59 million for HCLSoftware (20.1% of $294 million). That’s about $678 million in all, which squares with 18.2% of $3,724 million. On these estimates IT and Business Services brought in roughly 77% of segment EBIT, Engineering and R&D about 14% and HCLSoftware about 9%.

Step 3: Find what moved the group margin

The company margin was up 131 basis points on the previous quarter. To see where that came from, weight each segment’s margin change by its revenue share. IT and Business Services added about 1.21 percentage points (1.60 points times 75.6%) and HCLSoftware about 0.20 points (2.47 times 7.9%), while Engineering and R&D took off about 0.07 points (0.43 times 16.8%). That comes to roughly 1.33 points, close to the reported 1.31 points, with the small difference down to mix shifts and rounding. The answer is plain enough: nearly all of the quarter’s margin gain came from the biggest segment.

Step 4: Look at the trend, not just the quarter

The year-on-year columns paint a different picture for software. HCLSoftware’s share of revenue slipped from 9.1% a year earlier to 7.9%, its revenue fell 11.2% year on year in constant currency, and at 20.1% its EBIT margin was 636 basis points below a year ago, even though it was better than the previous quarter. Total revenue was $333 million in the September 2025 quarter against $294 million in the September 2026 quarter. Engineering and R&D margins, meanwhile, were 231 basis points lower year on year. You can’t see any of this in the headline margin, which was 71 basis points above a year ago.

A rising group margin can hide a shrinking or weakening division. Always check each segment’s growth and margin trend against the same quarter last year.

A routine for reading any segment table

1. Find the segment table in the consolidated results. Note how many segments there are and what each covers. If the company changed its segments, check whether earlier periods were restated, which Ind AS 108 requires unless the information is not available and the cost to develop it would be excessive.
2. Work out the revenue mix. Divide each segment’s revenue by the total. A segment that is growing fast but is tiny will not move the group much yet.
3. Calculate segment margins. Divide segment results by segment revenue. Compare each margin with the same quarter last year and the previous quarter.
4. Weight the changes. Multiply each segment’s margin change by its revenue share to see which business drove the group margin, as in the HCLTech example.
5. Read the reconciliation. Check the reconciling items between the segment total and the company’s profit before tax. If these are swinging, the segment story is incomplete.
6. Use segment assets if available. Segment results divided by segment capital employed gives a rough return on capital by business, which shows which divisions earn their keep.
7. Check customer concentration. Ind AS 108 requires a company to disclose if a single external customer accounts for 10% or more of its revenue, along with the total amount and the segments that report it.

Where readers trip up on segment results

• Comparing segments across companies as if they were standard. Segments follow each company’s internal reporting, so two companies’ “digital” or “consumer” segments may contain very different activities.
• Ignoring allocation choices. Ind AS 108 requires companies to explain how they measure segment profit, including the basis for transactions between segments and policies for allocating central costs. HCLTech’s release, for instance, says common assets and liabilities are allocated between its businesses in proportion to last twelve months’ revenue. A change in allocation can move segment margins without any change in the underlying business.
• Treating investor presentations and statutory segments as identical. Companies often give extra breakdowns, such as by vertical or geography, in investor releases. HCLTech’s release, for example, notes that its vertical and geography figures are for the services business only. Check which numbers come from the audited or reviewed segment note and which are management disclosures.
• Missing the inter-segment line. Segment revenues can add up to more than company revenue because sales between divisions are eliminated. Use revenue from operations, not the sum of segments, as the base.
• Reading one quarter in isolation. Seasonal businesses and one-off contracts can make a single quarter’s segment margin misleading. Compare with the same quarter last year. Our guide to exceptional items in quarterly results explains how one-off charges can distort the picture further.

Quick answers on segment reporting

Is segment reporting mandatory for every company?

Ind AS 108 covers companies to which the Indian Accounting Standards notified under the Companies Act apply. Even a company with just one business still has to make the entity-wide disclosures on products, geography and major customers that the standard asks for.

Why does a small segment still appear separately?

The 10% tests cover revenue, profit and assets, so a segment with little revenue can still qualify on profit or assets. Management can also choose to show a smaller segment if it thinks the information helps, or keep reporting one it considers to be of continuing significance.

What is the “unallocable” line in a segment table?

It carries income, expenses, assets or liabilities that the company doesn’t assign to any segment, head-office costs being the usual example. Ind AS 108 wants these reconciling items identified separately so the segment totals tie back to the company’s figures.

Can segment profit differ from what the profit and loss statement shows?

Yes, it can. Segment profit is whatever measure the chief operating decision maker uses, and Ind AS 108 includes adjustments, eliminations and allocations in it only if they are part of that measure. The required reconciliation explains the gap.

Why the segment note is worth your time

Segment reporting in quarterly results takes one set of consolidated numbers and gives you a business-by-business view. Ind AS 108 links segments to how management runs the company, uses 10% thresholds and a 75% coverage test to decide which segments get reported, and insists on reconciliations back to the company’s totals. To read the table well, turn shares into amounts, work out margins, weight the changes and check the trend against last year. HCLTech shows why that effort pays: a 131 basis point jump in the group margin came mostly from one segment, while a smaller business was shrinking year on year.

This article is for education only and is not investment advice. Company figures are taken from the cited filing; segment amounts and contributions are our approximate calculations from the published percentages, and the threshold example uses hypothetical numbers. Accounting standards and company disclosures can change; check the latest filings and consult a SEBI-registered adviser before making investment decisions.