HCL Tech shares decline as unchanged FY27 guidance signals slower recovery

HCL Technologies shares declined more than 3 per cent to ₹1,182.60 on the NSE after the company reported its Q1 earnings.

The company retained its FY27 margin guidance, signalling continued uncertainty in client spending and ‌slower recovery, while brokerages remained divided on the stock’s outlook following the results.

The company reported a consolidated net profit of ₹4,624 crore for the first quarter ended June 30. Management retained its FY27 revenue growth guidance of 1-4 per cent on an organic constant currency basis, excluding acquisitions such as Jaspersoft.

Domestic brokerage Motilal Oswal said it expects HCL Technologies to deliver a USD revenue CAGR of around 4 per cent and an INR PAT CAGR of 12.0 per cent over FY26-28, with EBIT margins of around 17.8 per cent. The brokerage said client-specific issues in key verticals such as telecom had reduced the company’s growth premium in FY27 estimates, although a potentially strong exit and continued deal wins could restore the gap in FY28 estimates. Motilal Oswal reiterated its ‘buy’ rating and raised its target price to ₹1,450 from a valuation based on 18x FY28E EPS, while maintaining HCL Technologies as its preferred pick among large-cap IT companies.

Global brokerage Nomura maintained its ‘buy’ rating and increased its target price to ₹1,290 from ₹1,250. The brokerage said FY27 had started on a healthy note with a good first quarter performance and highlighted investments in AI data centres aimed at moving up the value chain. Nomura also said margin normalisation was likely in FY27 and raised its FY27-28 EPS estimates by around 2-3 per cent to reflect the first-quarter results and the closure of the JasperSoft acquisition.

Morgan Stanley maintained its ‘equal-weight’ rating and raised its target price to ₹1,152 from ₹1,105. The brokerage said strong execution was reflected in advanced AI revenues and that the pipeline remained robust. However, it added that macro uncertainty continued to limit confidence in a growth inflection and warned that a lack of consensus upgrades and strong recent outperformance could lead to near-term underperformance. Morgan Stanley described the company’s data centre strategy as bold but said it would take time to strengthen its positioning within the client base.

JPMorgan maintained its ‘underweight’ rating on HCL Technologies and raised its target price to ₹1,060 from ₹1,000. The brokerage said the company delivered a revenue beat in the first quarter while margins were in line with expectations. It noted that both revenue growth and margin guidance for FY27 were maintained and increased its earnings estimates by 4-6 per cent over FY27-29 due to margin upgrades.

Kotak Securities maintained its ‘reduce’ rating with a target price of ₹1,200. The brokerage described the quarter as one of strong execution despite weakness in the operating environment and said the revenue decline broadly aligned with expectations. It noted that the company retained both revenue and margin guidance bands and pointed to a reasonable deal TCV in the first quarter of FY27, while expecting a stronger uptick in the second quarter of FY27.