HCL Tech Down 2% After Analysts Remain Divided On Outlook Amid Margin Pressure Post Q1

Last Updated:July 15, 2025, 09:24 IST

Shares of HCL Technologies will be in focus after the IT major reported weaker-than-expected June quarter results

HCL Tech Shares: Shares of HCL Technologies will be in focus after the IT major reported weaker-than-expected June quarter results, missing margin estimates and revising its EBIT margin guidance for FY26 to 17–18%, down from 18–19% earlier. The company cited lower utilisation levels and increased investments in GenAI and go-to-market strategies as reasons for the revision. On the positive side, revenue growth guidance for the full year was raised to 3–5% from 2–5%, broadly in line with market expectations.

The mixed performance has divided analyst opinion. While some brokerages remain optimistic on the company’s long-term growth potential, others have expressed concern over near-term headwinds and have issued downgrades.

Jefferies upgraded HCL Technologies to a “Buy” from “Hold” and sharply increased its price target by 30% to Rs 1,890 from Rs 1,450, implying an upside of over 15% from Monday’s closing price of Rs 1,613.5. Despite trimming FY26–28 earnings estimates by up to 2% to account for the revised margin guidance, Jefferies sees HCLTech delivering a 10% EPS CAGR over the period. “The company’s investments should support superior growth and premium valuations,” it noted.

Nomura also maintained its “Buy” rating, with a slightly reduced target price of Rs 1,810 (down from Rs 1,840). The firm expects margin recovery by FY27, though it too cut EPS estimates by 2–5% for the next two years.

On the other end of the spectrum, Nuvama downgraded the stock to “Hold” from “Buy,” slashing the price target to Rs 1,630 from Rs 1,700. It also cut EPS estimates by 5.7% and 3.1% for FY26 and FY27, respectively.

JPMorgan issued a downgrade to “Neutral” from “Overweight” and lowered its target price to Rs 1,700 from Rs 1,800. Similarly, Citi maintained its “Neutral” view but reduced its price target to Rs 1,650 from Rs 1,690, citing ongoing risks in the IT sector, including market fragmentation, AI-driven productivity disruption, rising global capability centers (GCCs), and macroeconomic uncertainties.

Of the 47 analysts tracking HCL Technologies, 18 have a “Buy” rating, another 18 rate it “Hold,” and 11 have a “Sell” call—reflecting the split in sentiment post the Q1 results.

Ahead of the earnings announcement, HCLTech shares ended 1.5% lower on Monday at Rs 1,613.5. The stock has declined around 6.5% over the past month.

Aparna Deb

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More

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