HCLTech Q4 Review: Result A Miss; FY26 Guidance Remains Sector-Leading — Dolat Capital Cuts Target Price

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Dolat Capital Report

HCLTech Ltd. reported revenue of $3,498 million, down 0.8% in constant currency (our estimate: +0.2%) due to weak Software biz and base effect of deal completion in Retail CPG vertical. The IT/ER&D/Software biz. saw sequential movement of -0.3%/5.5%/-12.9% QoQ. Operating profit margin lowered by 148 basis points to 18%, due to software biz. seasonality (124 bps), wage hike in Services (38 bps), S&M investments (266 bps) and forex benefit (46 bps).

The company expects CC growth of 2% to 5% for FY26 and OPM to remain stable at 18% to 19% (same as FY25), factoring in deteriorating demand at lower end and status quo at upper end, supported by deal wins ($3 billion), pipeline, and stable conversions.

HCLTech has acknowledged a weakened macro environment but is yet to take any hit and thus guides better. Factoring the outlook, we have lowered our FY26E/FY27E earnings by 3%/3.6%. Noting easing valuations, we revise our rating to ‘Accumulate’ with a target price of Rs. 1,760, at 24x of FY27E earnings.

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