HCL Technologies shares fell more than 3% on Tuesday, 14 July, despite the IT major's strong Q1 FY27 performance. The stock fell to an intraday low of Rs. 1,182.60. The drop implies that investors were not only reacting to quarterly numbers but also to cautious FY27 guidance, a sequential revenue drop in constant currency, and concerns around near-term demand in the IT sector.
HCL Tech's consolidated net profit increased 20.34% year-on-year (YoY) to Rs. 4,626 crore, from Rs. 3,844 crore in the corresponding quarter last year. Sequentially, profit rose around 3% from Rs. 4,490 crore in Q4 FY26.
Revenue from operations stood at Rs. 34,579 crore, 14% higher YoY and 1.8% higher on a QoQ basis. When measured in constant currency, the revenue rose 2.6% YoY and 0.5% QoQ, indicating some seasonal weakness and client-specific headwinds.
EBIT margin was 16.9% with the restructuring cost impact of 62 basis points included. The company has maintained its FY27 revenue growth target of 1-4% in constant currency, while maintaining the same EBIT margin range of 17.5%-18.5%.
The board also declared an interim dividend of Rs. 12 per share with July 17 as the record date.
A major positive was HCL Tech’s highest-ever Q1 new deal bookings of $2.4 billion. Its Advanced AI business also grew 10.6% QoQ and 62.1% YoY in constant currency terms to around $171-$172 million.
“We recorded our highest-ever Q1 net-new bookings of $2.4 billion, and our advanced AI business grew 10.6% QoQ and 62.1% YoY in constant currency terms. These demonstrate that enterprises are choosing us to lead their AI-led transformation,” said C Vijayakumar, Chief Executive Officer and Managing Director of HCL Technologies.
He added, “Combined with the operational efficiencies visible in margin expansion, this momentum gives us the confidence we're positioned to keep outpacing the market over the medium term.”
Also Read: HCLTech Signs $1.14 Billion AI-Led Deal With Europe-Based Fortune Global 50 Firm
Elara Securities says that the recently signed mega deal for $1.14 billion is not part of the current guidance for HCL Tech’s revenues and may be an upside. The brokerage changed its previous ‘Sell’ rating to ‘Accumulate’ and also lifted its target price from Rs. 960 to Rs. 1,310.
“The $1.14 billion mega deal signed in July is not factored into revenue growth guidance and may provide an upside risk. HCL Tech's investments in Sarvam AI and data centre capacity position it to create a first-mover advantage in the full-stack AI opportunity, while we expect revenue growth to pick up from Q2 with no risk to FY27 guidance,” Elara Securities said.
Nomura has reiterated its ‘Buy’ rating while raising its target price to Rs. 1,290 from Rs. 1,250, citing a healthy start to FY27. HCL Tech reported QFY27 revenue of $3.65 billion, down 0.5% QoQ but up 2.6% YoY in constant currency.
Antique, Capital 360 One and Systematix kept their ‘Hold’ ratings with target prices of Rs. 1,200, Rs. 1,225 and Rs. 1,200, respectively.