HCLTech Q2 Review: AI Led Growth Drives Record Win And Margin Momentum; IDBI Capital Upgrades Stock To 'Buy'

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IDBI Capital Report

HCLTech Ltd. delivered a resilient Q2 FY26 performance, registering a 2.4%/4.6% QoQ/YoY revenue expansion in CC term, underpinned by broad-based momentum across IT, Business, and Engineering Services. Operating margin strengthened to 17.5%, reflecting improved utilization, favorable forex movements, and operational discipline despite restructuring costs.

The company achieved record net new bookings of $2.6 billion, its highest ever without a mega deal, driven by diversified traction across verticals and geographies.

Advanced AI revenue surpassed $100 million (~3% of total), marking a strategic shift from experimentation to scaled monetization. The rollout of AI Force 2.0, along with AI Factory, AI Advisory, and AI Security offerings, reinforced HCL’s positioning as an enterprise AI transformation partner, supported by alliances with NVIDIA, Dell, HPE, and MIT Media Lab.

With attrition moderating to 12.6%, management reiterated its FY26 Ebit margin band of 17–18% and raised services revenue growth guidance to 4–5%, signaling confidence in sustained AI-led acceleration and non-linear productivity gains.

We upgrade the stock from Hold to Buy following recent price correction, while maintaining the target price of Rs1,725 based on a 23x FY27E EPS multiple.

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