What brokerages think of HCLTech's Q4 deal wins, tariff threats
HCLTechnologies, the third largest IT services provider in the country,
posted a net profit of Rs 4,307 crore
in the three months to March 2025, up 8% from a year ago. Revenue for the period rose 6% to Rs 30,246 crore. Ebit (earnings before interest and taxes) was up 8% on year to Rs 5,442 crore, while the EBIT margin improved 34 basis points year-on-year to 17.9%.
The company has managed to outgrow its peers amid macro uncertainty, while the results were in line with expectations, said brokerage Nuvama in a note. Revenue growth slipped on account of seasonality, but margins were stable. The deal pipeline remains close to all-time highs despite strong deal conversion, indicating more deal wins to come. The brokerage upgraded the stock to 'buy', with target price maintained at Rs 1,700.
HCLTech reported net new bookings of $3 billion, the second highest after the quarter ended September 2022, bringing its total TCV in fiscal year 2025 to $9.4 billion. These deals were well-distributed across geographies, service lines, and verticals, said Choice Equity Broking.
The deal pipeline is near all-time highs, with generative AI and AI capabilities leading engagements, said Motilal Oswal, adding that deal bookings in the March quarter indicate a strong June quarter performance. Analysts at the brokerage retained their 'buy' rating with a target price of Rs 1,480.
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However, concerns remain over the impact of reciprocal US tariffs. Since the heightened levies are expected to pose an immediate and higher impact on retail, consumer packaged goods and manufacturing clients, HCLTech's exposure to them would impact revenue growth, said Kotak Institutional Equities.
After the initial hit on retail and manufacturing, the IT major's management sees the pain spreading to other industries as well, with a lag, Kotak said. The brokerage has a 'reduce' rating on the company with a target price of Rs 1,500.
Tariffs and de-globalisation may lead to budget cuts, contract renegotiations or delays, impacting growth in the near to mid-term for HCLTech, said Choice Equity. However, this could also create opportunities for cost optimisation and supply chain diversification, where enterprises are expected to accelerate AI adoption to modernise core systems, the brokerage further added.
Choice Equity has revised its rating on HCLTech to 'add' from 'buy', and lowered its target price to Rs 1,580 from Rs 1,807 earlier.
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