Shares of HCLTech glimmered in the green, surging as much as 8% on April 23 after the information technology major reported largely in-line Q4 numbers, outperforming other large-cap peers like Infosys and Tata Consultancy Services.
It was the company’s outperformance ove prominent names, combined with the stock’s attractive valuations after the recent rout that attracted investors to lap up shares of HCLTech.
In a mixed set of earnings, the IT major posted an 8% year-on-year rise in net profit to Rs 4,307 crore for Q4 FY25, up from the Rs 3,986 crore that it reported a year ago. Revenue from operations rose 6% to Rs 30,246 crore. However, on a sequential basis, revenue edged up just 1%, while net profit slipped 6% quarter-on-quarter, reflecting some margin pressures despite steady topline growth.
Despite the rather subdued numbers, it was net new deal wins that stole the spotlight. Net new deal wins stood at around $3bn, marking a 31% year-on-year growth on the back of a near-record deal pipeline.
Brokerage firm HDFC Securities noted that despite these uncertainties, HCL Tech experienced strong deal bookings in Q4 FY25, indicating continued client engagement, and the pipeline remains robust.
For the full fiscal, HCL Tech reported a 6.5% growth in revenue and a 10.8% spike in net profit. The company delivered an EBIT margin of 18.3%, landing within its guided range of 18–19%.
However, it struck a cautious tone for the year ahead, revising its FY26 revenue growth guidance to 2–5% in constant currency terms, a downward revision at the lower end, trimming 250 basis points from last year’s outlook.
The management stated that its FY26 revenue guidance range also factored in the uncertain macroeconomic scenarios. “The lower end reflects expectations of a deteriorating macro environment and the closure of a large deal in the first quarter of FY26, while the upper end assumes a stable demand environment supported by robust deal closures in the same period,” the management said.
Additionally, the management further cautioned against the uncertainty stemming from tariff-related developments, stating that it could begin to impact sectors beyond retail and manufacturing, with a lag of one quarter. While discretionary spending has softened amid the prevailing macroeconomic challenges, HCL Tech believes this environment could, in turn, accelerate demand for cost-efficiency and cost take-out initiatives among clients.
While brokerages did take notice of the cautious guidance rolled out by HCLTech, they still rejoiced that the targets for FY26 were still ahead of consensus estimates, especially amidst an uncertain macro backdrop.
Brokerage firm Nuvama Institutional Equities also threw the light on HCLTech reporting the highest revenue growth in the large-cap IT Services space for three consecutive years. “Given its guidance, it shall be able to repeat the feat in FY26 too. All along its solid cashflow translates to a high dividend yield (4.2%) at current valuations. All this has led to a sharp rerating of the stock over the last two years, which we believe, should sustain,” Nuvama wrote in a note.
To that effect, Nuvama also upgraded the stock to a ‘buy’ with a price target of Rs 1,700, reflecting a 15% upside potential.
