Shares of HCL Technologies declined over 3% on Tuesday after the IT company reported its June quarter results, which received a mixed response from analysts. While the Noida-based company posted stable revenue growth and maintained its FY26 guidance, concerns around margin pressures and muted performance in certain verticals weighed on sentiment. Brokerages offered varied outlooks, with some cutting target prices due to subdued deal flow.

Reacting to the Q1FY26 results, HCLTech shares dropped by as much as 3.3% to ₹1,566 on the BSE, while its market capitalisation dropped to ₹4.24 lakh crore. Earlier today, the IT heavyweight opened lower at ₹1,590.10, down 1.84% against the previous closing price of ₹1,619.95.

HCLTech was the worst performer on the BSE Sensex pack, followed by Tata Steel, Tech Mahindra, UltraTech Cement, and Eternal (Zomato), among others. Meanwhile, Tata Consultancy Services (TCS), one of the most valued IT stocks, was trading trading marginally higher, while Infosys was trading in the red with a negative bias.

HCLTech, the third-largest IT services company after TCS and Infosys, reported consolidated revenue of ₹30,349 crore in the April-June quarter of 2025-26, up 8.2% year-on-year (YoY). Net income stood at ₹3,843 crore, down 9.7% YoY, primarily due to higher investments, especially in AI and GTM investments, lower utilisation, and modest growth in core segments.

On the operating front, EBIT stood at ₹4,942 crore, up 3.1% YoY, while margins for the quarter slid to 16.3% compared to 17.1% a year ago.

HCLTech has seen a dip in its total contract value (TCV) of new bookings in the first quarter on a YoY basis, from $1.9 billion last year to $1.8 billion this year. 

The company also declared a ₹12 per share dividend, marking its 90th consecutive quarter of dividend payout.

Analysts' view on HCLTech Q1

Brokerages gave a thumbs up to HCLTech’s top-line growth and raised FY26 guidance, but concerns over margin contraction, subdued deal flow, and limited near-term upside led many to lower their target prices and revise ratings downwards.

Foreign brokerage Citi has maintained a ‘Neutral’ rating but lowered its target price, noting that EBIT at 7% was below expectations. The firm cited weak margins and deal TCV as key negatives and cut HCL’s FY26/FY27 EPS estimates by 5% and 3%, respectively.

Nuvama Institutional Equities downgraded the stock to ‘Hold’ from ‘Buy’ and cut its price target. The brokerage described the margin performance as a "shocker," noting that the seasonal weakness weighed on growth and left little room for upside.

J.P. Morgan also downgraded HCL Tech to ‘Neutral’ from ‘Overweight’, reducing its target price. It attributed the margin erosion to AI-led deflation and remarked that relative growth strength has already been priced in.

In contrast, Jefferies took a more optimistic view, upgrading the stock to ‘Buy’ and raising its target price sharply. The brokerage highlighted that HCL's 3-5% FY26 growth guidance is the highest among the top five Indian IT firms, though it noted that margin guidance has been trimmed by 100 bps due to increased investments in growth.

CLSA retained its ‘Outperform’ rating, acknowledging a 0.8% QoQ constant currency decline in Q1 revenues.

Domestic brokerage Motilal Oswal reiterated its ‘Buy’ rating, saying that it remained the fastest-growing large-cap IT services company. The agency reduced FY26 estimates by 3-4% to account for higher investments, whereas it kept FY27 estimates largely unchanged. “We expect HCLT to deliver a CAGR of 7.0%/8.8% in USD revenue/INR PAT over FY25-27E.”

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