HCL Tech shares fall 3% despite Q1 beat; deal wins keep analysts upbeat

HCL Tech reported a 20.3 per cent increase in net profit for the first quarter to ₹4,624 crore on a year-on-year basis. Revenue for the quarter was up 13.9 per cent to ₹34,579 crore.

HCL Tech Q1 results review: HCL Tech reported its Q1FY27 results after market hours on Monday, delivering better-than-expected performance for the April–June quarter (Q1FY27). The IT services major's earnings were supported by robust deal momentum, with the company recording its highest-ever quarterly deal wins

 

However, the IT giant's counter came under pressure on Tuesday. At 9:19 AM, HCL Tech share price was trading 1.50 per cent lower at ₹1,204.80 per share on NSE. In comparison, Nifty 50 was down 0.38 per cent at 24,124.45. In intraday trade, the stock declined 3.19 per cent to touch the day's low at ₹1,182.60 per share.

 

 

HCL Tech Q1 results highlights:

 

• The company reported a 20.3 per cent increase in net profit for the first quarter to ₹4,624 crore on a year-on-year basis. Revenue for the quarter was up 13.9 per cent to ₹34,579 crore.
• On a constant currency (CC) basis, which discounts the impact of currency fluctuations, the company recorded a degrowth of 0.5 per cent quarter-on-quarter.
• The company announced plans to invest ₹3,500 crore to enter the AI data centre business, with a potential to scale it up to 50 MW capacity.
• The company’s headcount went down by 3,292 and stood at 223,889 at the end of June 30. Attrition was 12.7 per cent and fresher hiring fell to 1,056 from 1,984 in the same comparable period, a year earlier.
• The IT giant maintained FY27 guidance of 1–4 per cent CC revenue growth and 17.5–18.5 per cent Ebit margin

 

Brokerages’ view on HCL Tech post Q1 Results

 

Nomura | Buy | Target ₹1290

 

Nomura has reiterated its Buy rating on HCL Technologies while raising its target price to ₹1,290 from ₹1,250, citing a healthy start to FY27. HCL Tech reported 1QFY27 revenue of USD 3.65 billion, down 0.5 per cent quarter-on-quarter but up 2.6 per cent year-on-year in constant currency.

 

The brokerage noted that HCL Tech has retained its FY27 constant currency revenue growth guidance of 1–4 per cent, reflecting confidence in the demand environment despite macro uncertainties. 

Management clarified that the recently announced USD 1 billion-plus mega deal, secured in early July, is expected to ramp up meaningfully only from 1QFY28, limiting its contribution to FY27 revenues. Nomura expects margins to normalise during FY27 as the company continues to invest in future growth opportunities.

 

According to Nomura, HCL Tech’s AI data centre strategy is differentiated from that of large infrastructure players. Instead of leasing computing capacity, the company aims to provide an integrated, full-stack AI offering that combines infrastructure with higher-margin AI services and solutions. 

 

Antique | Hold | Target ₹1,225

 

Antique noted HCL Tech reported a soft but slightly better-than-expected 1QFY27, with revenue declining 0.5 per cent QoQ in CC terms (vs. brokerage's estimate of -1.1 per cent), dragged by a 3.7 per cent QoQ decline in ER&D due to continued discretionary spending cuts at two large US telecom clients, a headwind management had flagged last quarter and confirmed is playing out as expected. Deal momentum was the standout, with net-new TCV bookings of $2.4 billion, marking the company’s highest-ever Q1 bookings and ahead of the $2.2 billion trailing four-quarter average. 

 

The brokerage noted that demand remained stable, with management indicating no material change in the macro environment compared to the previous quarter.

 

The brokerage has raised its target price for the company marginally to ₹1,225 from ₹1,200 while maintaining its 15 times P/E multiple. Antique reiterated a 'Hold' rating for the counter.  Check Q1 Results Today

 

Capital 360 One | Hold | Target ₹1,200

 

Capital 360 One noted that HCL Tech reported a modest beat on its estimates in Q1FY27, noting that the company's relatively better growth trajectory will continue to support its premium valuation compared to its larger peers (currently 15 per cent premium). 

 

However, the report added that despite HCLT’s portfolio being better positioned to withstand major deflationary impact, industry-wide headwinds are likely to limit meaningful growth in the near term. 

 

The brokerage increased its FY27 and 28E EPS by 1.3 per cent and 1.7 per cent, respectively, factoring in 1Q results, recently concluded Japsersoft acquisition and mega deal win. 

 

Systematix | Hold | Target ₹1,180

 

Systematix noted that HCL Tech delivered an all-round beat in 1QFY27,  revenue and margins ahead of estimates despite seasonal softness, with EBIT margin at 16.9 per cent and record 1Q bookings of $2.4 billion. 

 

The brokerage also highlighted the company's Advanced AI revenue, which scaled to $172 million up 62.1 per cent Y-o-Y, nearing 4.7 per cent of total revenue, while the $150 million Sarvam investment and ₹3,500 crore AI data centre entry deepen HCL Tech’s sovereign AI positioning.  

 

However, Systematix noted client-specific challenges, rising competitive intensity in mega-deal bidding and AI-led deflation which could weigh on FY27 growth despite IT giant's consistent execution over the past three years.  

 

Systematix has broadly maintained its FY27E, FY28E and FY29E earnings estimates for HCL Technologies, reflecting the company's recent quarterly performance, unchanged FY27 revenue guidance and the expectation of higher competitive intensity across the IT services industry. At the current market price, the stock trades at 17 times FY27E EPS, 16 times  FY28E EPS and 15 times  FY29E EPS.

 

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