HCL Technologies has delivered another quarter of profit growth. Revenue increased, margins remained healthy, the company retained its full-year guidance and even announced an interim dividend.
Yet, the stock failed to cheer investors.
After Q1FY27 earnings were announced on July 13, HCLTech shares came under pressure in the early trade today, falling around 3% despite reporting better-than-expected numbers.
So, what is making investors cautious?
HCLTech Q1 scorecard
HCL Technologies reported a 20.34% year-on-year increase in consolidated net profit to Rs 4,626 crore for the June quarter, compared with Rs 3,844 crore a year earlier.
Revenue from operations rose 14% year-on-year and 1.8% quarter-on-quarter to Rs 34,579 crore.
The company also announced an interim dividend of Rs 12 per share. July 17 has been fixed as the record date, while shareholders will receive the dividend on July 27.
Even after these numbers, however, the stock opened around Rs 1,200 and was trading nearly 3% lower in the early trade.
Brokerage views on HCLTech after Q1
Are analysts still bullish? Has the investment case changed? Or is this decline creating a fresh buying opportunity?
Let’s decode what key brokerage houses like Motilal Oswal, Nomura and JM Financial make of the numbers and how are they looking at the management’s commentary on future outlook
Motilal Oswal remains among the biggest bulls
Motilal Oswal has maintained its ‘Buy’ rating and raised its target price to Rs 1,450. This implies an upside potential of nearly 19% from the current market price.
The brokerage believes HCLTech’s artificial intelligence strategy is beginning to take shape.
It said, “We maintain HCLTech as our preferred pick in the large-cap space.”
Another reason behind its optimism is the company’s deal pipeline.
Motilal Oswal in its report added, “The company reported its highest-ever Q1 bookings, while the recently announced $1.14 billion mega deal provides additional comfort around achieving the midpoint of guidance.”
The brokerage also highlighted HCLTech’s artificial intelligence investments.
It noted, “We believe HCLTech is investing ahead of the market to build the next-generation AI stack.”
At the same time, it cautioned that artificial intelligence investments may keep margins largely range-bound over the next two years.
Nomura positive, but upside looks limited
Nomura has also maintained a positive stance on the stock.
The brokerage house has retained a ‘Buy’ rating with a revised target price of Rs 1,290. This indicates a relatively modest upside of around 6%.
The brokerage expects HCLTech to comfortably meet its full-year guidance.
It said, “HCLTech needs CQGR of +0.5-2.5% at the overall level…to achieve its unchanged guidance.”
Nomura also believes the company’s entry into the artificial intelligence data centre business could become an important long-term growth driver.
Furthermore, Nomura in its report added, “HCLTech intends to differentiate its AI data center strategy from large infrastructure companies by focusing on a full-stack AI solution with high-margin services, rather than just renting out capacity.”
Following the quarterly results, Nomura raised its earnings estimates for FY27 and FY28 by around 2-3%.
JM Financial cautious, recommends ‘Reduce’
Unlike the other two brokerages, JM Financial continues to remain conservative.
The brokerage has maintained a ‘Reduce’ rating and revised its target price to Rs 1,100. This translates to a downside potential of nearly 10%.
As per brokerage report, the quarterly numbers were better than expected, but valuation remains a concern.
It noted, “Services EBIT margins came ahead versus expectations.”
JM Financial added that HCLTech currently trades at a premium compared with Infosys despite having a broadly similar organic growth profile.
The brokerage added that a healthy order book improves near-term visibility, but believes the current valuation already factors in much of that optimism.
What does this mean for investors?
The June-quarter earnings have not changed the broader debate around HCL Tech.
Most brokerages agree that the company continues to win large deals, has maintained its guidance and is investing aggressively in artificial intelligence.
The difference lies in valuation.
Motilal Oswal sees significant upside driven by long-term artificial intelligence opportunities.
Similarly, Nomura also remains positive but expects relatively limited gains from current levels.
However, JM Financial believes the stock’s valuation leaves little room for further upside.
Looking at the share performance of this IT sector company, the shares have gained around 6% in the past one month, but remain down 28% over six months, 26% over the past year. So far in 2026, the share price of the company is trading down 27%.
The stock currently trades at a price-to-earnings (P/E) ratio of 19.31, with a 52-week high of Rs 1,780.10 and a 52-week low of Rs 1,030.
Disclaimer: The investment ratings, target prices, and market commentary featured in this report represent the independent assessments of the respective brokerage houses and do not reflect the editorial stance of this publication. The contents herein are for informational purposes only and do not constitute an offer, solicitation, or recommendation to buy, sell, or hold any securities. Equity investments are subject to inherent market risks and price volatility. Readers are strongly advised to verify all financial data independently and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.
