HCLTech Q1 Results Review: Continues To Impress Despite Margin Hiccup, Says Motilal Oswal Maintaining 'Buy'

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Motilal Oswal Report

HCLTech Ltd. reported Q1 FY26 revenue of $3.5 billion, down 0.8% QoQ CC vs our estimate of 1.2% QoQ CC decline. Ebit margins came in at 16.3% vs our estimate of 17.5%. New deal total contract value stood at $1.8 billion (down 8% YoY) in Q1 FY26.

For FY26, revenue growth guidance was increased to 3%-5% YoY CC (from 2%-5% earlier), implying a CQGR range of 1.4%-2.7% for the next three quarters. Ebit margin guidance was lowered to 17%-18% for FY26 (from 18%-19% earlier).

For Q1 FY26, revenue/Ebit grew 8.2%/3.0% and PAT declined 10% YoY in INR terms. We expect revenue/Ebit/PAT to grow by 9.4%/2.1%/5.3% YoY in Q2 FY26. HCLTech remains the fastest-growing large-cap IT services company, and we like its all-weather portfolio.

We reiterate our Buy rating on HCLTech with a target price of Rs 2,000, implying a 23% potential upside.

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