HCLTech Ltd. stock is now split between bullish and cautious recommendations from brokerages after its June quarter results and guidance commentary disappointed.
Out of the 47 analysts tracking the company, 18 each have a 'buy' and 'hold' rating. Eleven have a 'sell' call on the stock, according to Bloomberg data. The average of 12-month price targets of Rs 1,675, implies a return potential of 3.4%.
Analysts at JPMorgan and Nuvama downgraded the stock, while Jefferies upgraded it after the results were announced on Monday. Motilal Oswal has the highest price target of Rs 2,000, followed by Rs 1,970 from Macquarie.
HCLTech Guidance, Q1 Recap
HCLTech narrowed its full-year revenue guidance and lowered its margin forecast for FY26 after reporting an 11% drop in first-quarter profit that missed analysts’ expectations.
The company now expects constant currency revenue growth of 3% to 5% year-on-year for the financial year ending March 2026, against its earlier projection of 2% to 5%, according to its notification to the exchanges. It expects its services revenue guidance at 3% to 5%.
Revenue up 0.3% to Rs 30,349 crore versus Rs 30,246 crore (Bloomberg estimate: Rs 30,298 crore)
EBIT down 9% to Rs 4,942.00 crore versus Rs 5,442.00 crore (Bloomberg estimate: Rs 5,286.25 crore)
EBIT margin expands by 170basis points to 16.3% versus 18% (Bloomberg estimate: 17.45%)
Profit down 11% to Rs 3,843 crore versus Rs 4,307 crore (Bloomberg estimate: Rs 4,258.91 crore)
Brokerages On HCLTech Q1 Results
JPMorgan
Downgrade to 'Neutral' from 'Overweight' and reduce target price to Rs 1,700 from Rs 1,800.
AI-driven deflation is manifesting through margin erosion.
FY26 revenue growth guide revised upwards.
Near-term price action has baked in the relative growth strength.
Jefferies
Upgrade to 'Buy' from 'Hold' and hike target price to Rs 1,850 from Rs 1,490.
Superior growth outlook; Lower end of guidance raised.
Accelerated investments in growth led to a margin guidance cut.
Expect 10% earnings per share CAGR over two years.
Investments should support premium valuations.
Nuvama
Downgrade to 'Hold' from 'Buy' and reduce target price to Rs 1,630 from Rs 1,700.
Weak margins leave limited upside potential.
Q1 seasonality impacted growth; margins are a shocker.
Continue to like HCLTech's revenue growth profile as it remains the fastest-growing.
Citi
Maintain 'Neutral' and reduce target price to Rs 1,650 from Rs 1,690.
EBIT of 7% below expectations, and the deal pipeline is weak.
The result was decent on revenue but light on margins and total contract value.
The result will also raise some questions on margin risks.
Maintain our cautious view on the sector.
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