HCLTech management guided 2–5% CC revenue growth, including 4.1% organic and 50bps inorganic contribution. Ebit margin guidance remains at 18–19%. An additional 1% impact is expected from acquisitions, with Q1 projected to outperform YoY despite typical seasonality.
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HCLTech Ltd. reported a modest 0.8% QoQ decline in constant currency, primarily due to seasonal softness in its software business. Management anticipates the impact of tariffs to extend beyond retail and manufacturing to other verticals, albeit with a quarter's lag.
Nonetheless, the company remains constructively optimistic on demand, led by its AI-led transformation initiatives. Company has delivered by a robust growth of 43% QoQ in net new deal total contract value ($3 billion in Q4), taking FY25's total to $9.4 billion, driven largely by strong renewals.
Riding this momentum, management has guided FY26 revenue growth of 3–5%, including a 50bps uplift from the HPE-CPG deal. Given HCL's superior deal traction and resilient guidance amidst macro uncertainty, we upgrade the stock from Hold to Buy, assigning a target price of Rs1,725 based on 23x FY27E EPS. We view HCL as a relative outperformer among peers.
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