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HCL Tech shares slide 4% as analysts trim estimates post Q1 miss
The IT giant's stock fell as much as 4.31 per cent during the day to ₹1,550 per share, the biggest intraday fall since April 7 this year. The stock pared gains to trade 3 per cent lower at ₹1,569.7 apiece, compared to a 0.55 per cent advance in Nifty 50 as of 11:45 AM.
HCL Tech Q1FY26 results
The IT services firm reported a net profit of ₹3,843 crore for the first quarter of the financial year 2026 (Q1-FY26), down 9.72 per cent year-on-year (Y-o-Y). On a sequential basis, profit was down 10.7 per cent.
The company reported 3.7 per cent constant-currency (CC) revenue growth for the April-June quarter. Revenue from financial services was up 6.8 per cent, technology 13.7 per cent, and telecommunications 13 per cent. The manufacturing and life sciences verticals were down 1 per cent and 4 per cent, respectively.
HCL Tech FY26 guidance
HCL expects revenue to grow 3-5 per cent on a CC basis for the full year, up from 2-5 per cent it had projected in April. However, the firm cut its Ebit (earnings before interest and tax) margin guidance to 17-18 per cent from 18-19 per cent earlier. The company said the margins would be impacted due to restructuring.
HCL Tech management commentary
'The macro environment remained stable from an overall perspective, with some variations across verticals, but the overall situation did not deteriorate as feared at the start of the quarter,' said C Vijayakumar, chief executive officer (CEO) and managing director, at a news conference.
'We won a large consolidation deal in financial services this quarter, which is not accounted for in the total contract value (TCV) for the first quarter,' Vijayakumar added. The value of the new deal bookings stood at $1.81 billion.
Analysts on HCL results
Nuvama Institutional Equities said that weak margins in Q1-FY26 and a guidance cut have left HCLTech with almost no earnings per share (EPS) growth expected for FY26. "While we continue to favour its strong revenue growth, making it the fastest-growing among the top five IT firms, earnings have been impacted by lower margin expectations."
Nuvama downgraded the stock to 'hold' and said that it now trades at a slight premium to TCS and Infosys, limiting further upside.
Emkay Global noted that HCLTech's Q1FY26 operating performance was weaker than expected, primarily due to a margin miss, although revenue was in line. The brokerage lowered its FY26-28 earnings per share (EPS) estimates by 3-7 per cent, factoring in the Q1 results and the margin guidance cut. It retained 'Reduce' rating and revised the target price by around 5 per cent to ₹1,660.
Nomura cut its FY26-27 EPS estimates by around 2-5 per cent and slashed the target price to ₹1,810 (from ₹1,840 earlier). "We expect the street to look past the near-term margin miss, as margins are likely to recover in FY27, and instead focus on HCLTech's continued revenue outperformance."
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