HCL Tech shares tank over 9% after weak This fall. JPMorgan, HSBC & 3 others minimize goal value
The IT main reported a 4.2% rise in consolidated web revenue for the March quarter at Rs 4,488 crore, in comparison with Rs 4,307 crore in the identical interval final yr.
Income from operations for Q4FY26 got here in at Rs 33,981 crore, marking a 12% improve from Rs 30,246 crore recorded within the corresponding quarter of the earlier monetary yr.
The corporate has guided for income progress of 1% to 4% year-on-year (YoY) in fixed forex phrases, with providers income anticipated to develop between 1.5% and 4.5%. EBIT margin is projected within the vary of 17.5% to 18.5%.
On a sequential foundation, income rose marginally by 0.3% from Rs 33,872 crore reported in Q3FY26. Nevertheless, in fixed forex phrases, income declined 3.3% quarter-on-quarter and grew 2.4% YoY. Income in greenback phrases stood at $3,682 million, down 2.9% sequentially however up 5.3% in comparison with final yr.
In consequence, the corporate missed its FY26 income progress steerage. What was projected at 4%-4.5% progress, got here in at 3.9% for the yr.
Companies income in fixed forex slipped 0.1% quarter-on-quarter however elevated 4.2% year-on-year. Income from superior AI stood at $155 million through the quarter, reflecting a 6.1% sequential rise in fixed forex.What are specialists saying?
Nomura has maintained its purchase name on HCL Tech, though the brokerage has trimmed its goal value to Rs 1,600 from Rs 1,700, implying an upside of about 11%. The agency flagged that FY27 progress steerage is weaker than anticipated, with two client-specific points more likely to act as headwinds, shaving off round 50 foundation factors from progress in FY27E. On the midpoint of its steerage, HCL Tech is factoring in no enchancment in discretionary demand, together with a ramp-down in enterprise from these two purchasers past earlier expectations.
Nomura now expects the corporate to ship income progress of three.8% to five.6% YoY in greenback phrases over FY27 to FY28. Reflecting the softer outlook, the brokerage has additionally minimize its EPS estimates for FY27 and FY28 by round 5% to 7%, factoring within the decrease progress trajectory.
JPMorgan has maintained a ‘Impartial’ score on HCLTech and lowered its goal value to Rs 1,370 from Rs 1,419. The brokerage famous that the corporate’s This fall efficiency missed expectations on income, margins and earnings. Total income got here in 2% under estimates, with providers income trailing by 130 foundation factors versus its projections.
Administration attributed this to lowered discretionary spending by two massive US telecom purchasers and the cancellation of two SAP tasks.
HSBC has retained a ‘Maintain’ score and minimize its goal value to Rs 1,480 from Rs 1,560. The brokerage mentioned the corporate’s Q4FY26 efficiency was a pointy miss, which has additionally led to weaker-than-expected progress steerage for FY27. The miss was primarily because of surprising finances cuts at key US telecom purchasers and the cancellation of some SAP tasks. HSBC added that earnings progress and inventory returns are unlikely to compound at double-digit charges within the close to time period.
Motilal Oswal Monetary Companies has maintained a ‘Purchase’ score, however lowered its goal value to Rs 1,650, implying an upside of about 15%. The brokerage famous that the corporate’s softer FY27 steerage is essentially pushed by client-specific challenges and weak spot seen in March. This contains disruptions at choose purchasers and a pointy pullback in discretionary spending within the telecom phase by two massive US-based purchasers.
Geographically, Europe continues to stay weak because of geopolitical uncertainties, whereas North America is comparatively steady other than these client-specific points. Motilal Oswal additionally highlighted that weak spot within the software program enterprise was partly because of delays in deal closures, influenced by elements such because the US authorities shutdown and the continuing disaster in West Asia.
HDFC Securities has additionally maintained a ‘Purchase’ score on the inventory, whereas revising its goal value downward to Rs 1,465. The brokerage famous that providers income declined 0.1% QoQ in fixed forex phrases, with weak spot seen throughout providers, ER&D, and software program segments. This softness was largely attributed to a slowdown within the telecom vertical and a ramp-down in SAP-related work.
(Disclaimer: Suggestions, solutions, views and opinions given by the specialists are their very own. These don’t symbolize the views of The Financial Instances)
