HCLTech Shares Downgraded To 'Reduce' By Dolat Capital Despite Q3 Beat — Here's Why

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Dolat Capital Report

Dolat Captial has revised its stance on HCLTech to ‘Reduce’, citing limited upside after the recent rally of over 10% since Q2. While the brokerage acknowledges that HCLTech’s guidance remains industry-leading, the slip in PAT during Q3 is attributed to a one-time impact, which is expected to normalize going forward.

Despite strong fundamentals, including accelerating deal conversions and resilient margins, Dolat Capital sees near-term upside as capped given the sharp run-up in the stock.

HCLTech Ltd. reported revenue of $3,793 million, up 4.2% QoQ constant currency (beat). The IT/ ER&D/software business recorded positive sequential movement of 1.5%/ 3.1%/28% QoQ CC.

Operating profit margin grew by 118bps to 18.6% (including 80 bps restructuring impact but excluding one-time labour code impact ~Rs 960 crore).

Management narrowed its overall growth guidance to 4–4.5% CC, while raising service biz revenue growth guidance to 4.75–5.25% CC although it sees no notable shifts from prior trends.

Ebit margin guidance retained at 17–18%.

Factoring positive Q3 and solid total contract value wins, the brokerage slightly modifies FY26/27/28E earnings by -0.1/+1.4%/+1.5%.

Recent price movements (10%+ since Q2) limit upside, thus Dolat Capital revises to ‘Reduce’ rating with a target price of Rs 1,800, (valued at 24x of FY28E earnings per share).

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