Reduce HCL Technologies; target of Rs 1390: ICICI Securities

ICICI Securities research report on HCL Technologies

HCLT’s FY26 revenue organic guidance of 1–4% YoY CC appears optimistic at its upper end, implying -0.6% to 0.9% organic CQGR. It is supported by an exit growth rate of 1.6%. Management mentioned that it did not see any project deferral or rampdown due to tariff-related uncertainties in Q4FY25. However, it expects weakness in retail and manufacturing along with an adverse spillover to other verticals amid macro weakness. Q4 deal TCV was strong, at USD 2.995bn, up 43%/30.8% QoQ/YoY. The pipeline too is strong; however, heightened uncertainty persists in deal conversion. We cut our FY26E/FY27E EPS by 2%/2.4%, basis lower revenue estimates.

Outlook

We value HCLT on an SoTP basis – services (IT and ER&D) at 20x and products at 18x on Q4FY26E–Q3FY27E EPS. Our TP stands at INR 1,390. Retain REDUCE.