HCL Technologies Ltd. announced better-than-expected results for the June quarter (Q1 FY27), yet chose to maintain its revenue growth and margin guidance for the full fiscal year 2027. This decision has led to a range of reactions and varied share price targets from leading global and domestic brokerages.
Brokerages Offer Diverse Outlooks on HCL Tech
Following the earnings report, several prominent brokerages revised their ratings and target prices for HCL Tech shares. JPMorgan maintained an 'Underweight' rating, raising its target slightly to Rs 1,060 from Rs 1,000. Jefferies, however, retained an 'Underperform' rating and cut its target to Rs 1,070 from Rs 1,165.
Citi also maintained a 'Sell' rating, lowering its target price to Rs 1,040 from Rs 1,135. In contrast, HSBC reiterated its 'Buy' rating, keeping its target unchanged at Rs 1,255. UBS similarly maintained a 'Buy' rating, increasing its target to Rs 1,390 from Rs 1,355.
Other significant revisions included Investec raising its target to Rs 1,370, Nomura increasing its target to Rs 1,290, and Morgan Stanley revising its target to Rs 1,152. CLSA, however, lowered its target price to Rs 1,191.
Key Factors Influencing Analyst Views
Analysts highlighted HCL Tech's decision not to raise its growth outlook as a signal of ongoing challenges in its core business. Furthermore, the narrowing growth premium of HCL Tech over competitors like Tata Consultancy Services (TCS) and Infosys is making its current valuation harder to justify for some.
Nuvama noted that HCL Tech currently trades at approximately 17x FY27 PE, a significant premium compared to TCS/Infosys at 14x. They expressed concern that the narrowing growth differential, coupled with risks from data-center investments, makes the risk-reward unattractive.
“We believe HCLT is investing ahead of the market to build the next-generation AI stack,” stated MOFSL, reiterating a 'Buy' rating with a revised target of Rs 1,450, citing HCLT's all-weather portfolio and strategic AI investments.
Strategic AI Investments and Strong Deal Wins
Despite the cautious outlook from some, HCL Tech announced ambitious plans to invest up to Rs 3,500 crore in building a full-stack AI data center business, scalable to 50MW capacity. This follows a prior $150 million investment in Sarvam, India's sovereign LLM initiative, signaling a strong commitment to artificial intelligence.
The company also reported its highest-ever Q1 net new deal wins, totaling $2.4 billion. This figure excludes a recently announced mega-deal with a European Global F-50 company, expected to contribute from FY28 onwards. Additionally, HCL Tech completed the acquisition of Jaspersoft, projected to add $10–15 million to quarterly run rates from Q2 FY27.
Advanced AI revenue saw substantial growth, increasing 10.3 percent quarter-on-quarter and 62.1 percent year-on-year, reaching $172 million.