HCLTech Q2 Review — Robust Earnings Led By Broad-Based Revenue Growth; ICICI Securities Upgrades To 'Hold'

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ICICI Securities Report

HCLTech Ltd. reported a strong beat on revenue driven by broad-based growth across key verticals. Key highlights of Q2 FY26 result include:

1. HCLTech has quantified ‘Advance AI’ revenue of $100 million for Q2 (3% of overall revenue on annualised basis),

2. it acknowledged the deflationary impact in renewal deals with a reduction in overall annual contract value in five out of 10 large deals. Management is proactively transforming its business model, investing in AI to retain growth leadership,

3. HCLTech is gaining share in financial services,

4. HCLTech's AI strategy is rooted in an asset-light framework centered on IP creation and service transformation, which will preserve its current capital structure.

We raise EPS by 2.3%/2.1%/1.6% for FY26/27/28E led by an increase in revenue growth. Upgrade to Hold (from Reduce) with a revised target price of Rs 1,430, based on 20x one-year forward PE for services business and 18x for product business.

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