Brokerages raised their target prices on HCLTech after the IT services company's June-quarter results, citing resilient execution, higher margins, record deal wins and strong growth in its artificial intelligence business. JPMorgan, Nomura and Morgan Stanley all increased their valuations while retaining their ratings, although they remained divided on the stock's upside amid an uncertain demand environment.
The June-quarter earnings were broadly in line with expectations, with HCLTech beating estimates on profit, revenue and EBIT while maintaining its FY27 revenue growth and margin guidance. Analysts also highlighted the company's record $2.4 billion deal bookings, rising AI revenue and planned Rs 3,500 crore investment in data centre infrastructure as key positives, though some cautioned that macroeconomic uncertainty could delay a broader recovery in IT spending.
HCLTech Q1 Results (Consolidated, QoQ)
- Net Profit rises 3% at Rs 4,624 crore versus Rs 4,488 crore (Bloomberg estimates: Rs 4,529 crore).
- Revenue rises 1.8% at Rs 34,579 crore versus Rs 33,981 crore (Estimate: Rs 34,326 crore).
- EBIT rises 3.8% at Rs 5,831 crore versus Rs 5,620 crore (Estimate: Rs 5,808 crore).
- EBIT Margin at 16.9% versus 16.5% (Estimate: 16.97%).
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Here's what brokerages are saying after HCLTech announced Q1 results:
JPMorgan on HCL Tech
- Maintained 'Underweight'; hiked target price to Rs 1060 from Rs 1000
- Q1 print - rev beat, margins in line
- FY27 revenue growth guidance maintained
- FY27 margin guide maintained
- Increase earnings by 4-6% from margin upgrades over FY27-29
Nomura on HCL Tech
- Maintained 'Buy'; hiked target price to Rs 1290 from Rs 1250
- FY27 starts on a healthy note with good Q1
- Investment in AI data center to go up the value chain
- Margin normalisation likely in FY27
- Hike FY27-28 EPS estimates by ~2-3% to factor in the 1Q results and JasperSoft (unlisted) acquisition closure
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MS on HCL Tech
- Maintained 'Equal-weight'; hiked target price to Rs 1152 from Rs 1105
- Consensus estimates to stay put
- Strong execution was reflected in Advanced AI revenues
- Pipeline is robust, but macro uncertainty still keeps us cautious about inflection in growth
- Lack of consensus upgrades and strong recent outperformance may lead to near-term underperformance
- Think the data center strategy is bold
- It will take time to show up in its stronger positioning within the client base
Kotak Securities on HCL Tech
- Maintained 'Reduce' with a target price of Rs 1200
- Strong execution in a weak quarter
- Revenue decline broadly aligns with expectation
- Retains both revenue and margin guidance bands
- Reasonable deal TCV in 1QFY27; expect strong uptick in 2QFY27
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