Motilal Oswal's research report on HCL Technologies
HCL Technologies (HCLT) reported 1QFY26 revenue of USD3.5b, down 0.8% QoQ CC vs. our estimate of 1.2% QoQ CC decline. EBIT margins came in at 16.3% vs. our estimate of 17.5%. New deal TCV stood at USD1.8b (down 8% YoY) in 1QFY26. For FY26, revenue growth guidance was increased to 3%-5% YoY CC (from 2%-5% earlier), implying a CQGR range of 1.4%-2.7% for the next three quarters. EBIT margin guidance was lowered to 17%-18% for FY26 (from 18%-19% earlier). For 1QFY26, revenue/EBIT grew 8.2%/3.0% and PAT declined 10% YoY in INR terms.
Outlook
We expect revenue/EBIT/PAT to grow by 9.4%/2.1%/5.3% YoY in 2QFY26. HCLT remains the fastest-growing large-cap IT services company, and we like its all-weather portfolio. We reiterate our BUY rating on HCLT with a TP of INR2,000, implying a 23% potential upside.
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