ICICI Securities research report on HCL Technologies
HCLT reported a strong beat on revenue driven by broad-based growth across key verticals. Key highlights of Q2FY26 result include: 1) HCLT has quantified ‘Advance AI’ revenue of USD 100mn for Q2 (3% of overall revenue on annualised basis), 2) it acknowledged the deflationary impact in renewal deals with a reduction in overall ACV in 5 out of 10 large deals. Management is proactively transforming its business model, investing in AI to retain growth leadership, 3) HCLT is gaining share in financial services, 4) HCLTech's AI strategy is rooted in an asset-light framework centered on IP creation and service transformation, which will preserve its current capital structure.
Outlook
We raise EPS by 2.3%/2.1%/1.6% for FY26/27/28E led by an increase in revenue growth. Upgrade to HOLD (from Reduce) with a revised TP of INR 1,430, based on 20x one-year forward PE for services business and 18x for product business.
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