Is HCLTech  ‘Buy’ or ‘Sell’ now? 6 top brokerages decode floor amid soft FY27 guidance

The trigger was a combination of a miss on revenue and margins in the March quarter and a muted outlook for FY27, with the company guiding for 1% to 4% revenue growth in constant currency. Analysts point to client-specific disruptions, weaker discretionary spending and early signs of pricing pressure linked to artificial intelligence adoption. 

Meanwhile, brokerages including Nomura, Jefferies, Motilal Oswal and others have shared their update with ratings that now span from ‘Buy’ to ‘Underperform’, with target prices ranging from Rs 1,165 to Rs 1,650 per share 

Here is a detailed analysis of the rationale driving the investment call on the stock. 

Jefferies on HCL Technologies: ‘Underperform’

Jefferies has taken the most cautious stance among major brokerages, downgrading the stock to ‘Underperform’ and setting a target price of Rs 1,165, which implies a downside of about 18%.

The firm has cut its earnings estimates by 1% to 2% and reduced its valuation multiple, citing a weaker growth outlook. It expects HCL Technologies to deliver modest organic revenue growth over the next few years, with FY27 growth seen at the lower end of the guidance band.

Jefferies pointed out that both services and software segments disappointed in the March quarter, with software revenue declining sharply and services impacted by telecom spending cuts.

“A significant scale down of IT budgets by large clients in manufacturing and retail vertical, cuts in discretionary IT spends by two large telecom clients, worsening outlook in Europe due to geopolitical issues and deflationary impact of AI were the key reasons for the weaker guidance,” Jefferies said.

The brokerage also warned that weaker growth expectations could lead to valuation compression, especially as the stock trades at a premium to peers.

Nomura on HCL Technologies: ‘Buy’

Nomura has retained a ‘Buy’ rating on HCL Technologies with a target price of Rs 1,600, implying an upside of about 11% from the pre-correction levels. The brokerage has, however, cut its earnings estimates by 5% to 7% for FY27 and FY28 after factoring in weaker growth expectations.

The firm notes that March quarter revenue came in at USD 3,682 million, declining 3.3% sequentially in constant currency, while EBIT margin stood at 16.5%, both below expectations. The weak performance was led by a steep drop in the products business and slower deal wins, with total contract value at about $1.9 billion, down 35% year-on-year.

Nomura expects growth to remain under pressure in the near term, with FY27 revenue guidance of 1% to 4% trailing its earlier expectations. At the same time, margin guidance of 17.5% to 18.5% remains intact, offering some support.

“The company has guided for 1-4% y-y growth at overall level with Services growth of 1.5-4.5% y-y,” Nomura said.
Source: Nomura report

It adds that two client-specific issues will create a headwind of about 50 basis points on growth in FY27, while artificial intelligence-led deflation could shave off 2% to 3% from revenue.

Motilal Oswal on HCL Technologies: Buy

Motilal Oswal has reiterated a ‘Buy’ rating with a target price of Rs 1,650, implying an upside of about 15%.

The brokerage acknowledged the weak quarter but believes the company’s diversified portfolio and strong presence in engineering and infrastructure services provide resilience. It expects revenue growth of 1% to 4% in FY27 and sees services growth at 1.5% to 4.5%.

Motilal Oswal also pointed to stable margins and strong cash generation as positives, even as near-term growth remains muted.

It added that client-specific disruptions and early-stage artificial intelligence deflation are weighing on performance, but the long-term structural story remains intact.

Elara Securities on HCL Technologies: ‘Sell’

Elara Securities has maintained a ‘Sell’ rating on the stock and cut its target price to Rs 1,200 from Rs 1,270, implying a downside of about 17%.

The brokerage points to an unusually weak quarter, with revenue declining 3.3% sequentially in constant currency, driven by discretionary spending cuts in two large telecom clients and the discontinuation of SAP programmes in manufacturing and retail accounts. It also notes that the products segment saw a sharp 28.1% sequential drop, weighing on overall growth.

Looking ahead, Elara expects growth to remain modest, building in revenue growth of about 2.5% for FY27 and about 2% for FY28, along with earnings downgrades of 3% to 5%.

“Q4 revenues were unusually weak and considering sustained weakness in some of the clients for the full calendar year, these will have a bearing on full-year revenues,” Elara Securities said.
Source: Elara Securities report

The brokerage also flagged that continued softness in discretionary spending and telecom vertical weakness could weigh on performance through FY27.

Axis Securities on HCL Technologies: ‘Hold’

Axis Securities has downgraded its stance to ‘Hold’ and set a target price of Rs 1,550, implying an upside of about 8% from Rs 1,442 levels.

The firm highlighted that the March quarter saw misses across revenue, EBIT margin and profit, with margin at 16.5% falling both sequentially and year-on-year. Despite this, it believes the company retains long-term growth potential supported by deal wins and artificial intelligence-led opportunities.

Axis expects recovery to be gradual, with near-term pressures from reduced discretionary spending and client-specific issues.

“We believe HCL will start commencing a better recovery post restructuring initiatives and AI implementation across its verticals,” Axis Securities said.
Source: Axis Securities report

The brokerage also noted that the company expects a 2% to 3% impact from artificial intelligence on its portfolio, which remains a key variable to track.

JM Financial on HCL Technologies: ‘Reduce’

JM Financial has downgraded the stock to ‘Reduce’ and cut its target price to Rs 1,350, indicating a downside of about 6.3%.

The brokerage attributed the weak quarter to discretionary spending cuts by two large telecom clients and the discontinuation of SAP programmes, which led to a decline in services revenue and pressure on margins. It also flagged that new deal wins moderated, with quarterly total contract value at USD 1.93 billion.

JM Financial expects growth visibility to remain limited in the near term, given the company’s guidance and the broader demand environment.

“Lower end of revenue guide assumes continued discretionary softness and further ramp-downs from the two flagged clients,” the firm said.

It also noted that artificial intelligence-led deflation is expected to impact revenue by 2% to 3%, adding to near-term pressures.

Conclusion

Brokerage opinion on HCL Technologies has turned sharply divided after the March quarter, with optimism on long-term capabilities set against immediate concerns on growth and client spending. The spread in target prices and ratings captures that divide.

Near-term visibility remains weak, with guidance pointing to modest growth and continued pressure from a handful of large clients. Artificial intelligence, while opening new avenues, is also beginning to compress pricing in parts of the portfolio.

Whether the stock has found a floor based on brokerage analysis consensus is that it will depend on how quickly demand stabilises and whether deal wins pick up in the coming quarters. For now, the Street appears cautious, with even bullish calls tempered by lower estimates and guarded commentary.

Disclaimer: While this report summarizes analysis and price targets from various SEBI-registered brokerage firms, the views expressed are those of the respective institutions and do not constitute a direct recommendation to buy, sell, or hold the stock by this publication. Investors should note that equity investments involve significant market risk, and past performance is not a guarantee of future results. It is highly recommended to consult with a qualified financial advisor to assess the suitability of any investment based on your individual risk profile and financial goals.

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