HCLTech shares could see further upside, analysts reassured after Q2 results

Shares of HCL Technologies Ltd. opened with gains on Tuesday, October 14, following the company's September quarter earnings, performance which was reassuring after a weak first quarter. Analysts tracking the stock have largely maintained their ratings and price targets on the company.

HCLTech's revenue growth and margins came in ahead of estimates, driven by better-than-expected performance in its services business.

The company reported constant currency revenue growth of 2.4%, versus an estimate of 1.5%. EBIT margins stood at 17.4%, compared to expectations of 17.1%, expanding 110 basis points quarter-on-quarter.

The company retained its overall revenue growth guidance at 3-5%, while narrowing services revenue growth guidance to 4-5% from 3-5% earlier. FY26 EBIT margin guidance was maintained at 17-18%.

Jefferies maintained its 'Buy' rating on HCLTech, with a price target of ₹1,730. The brokerage said the company beat Q2 estimates with stronger revenue growth and robust deal wins. It said that HCLTech's infrastructure services strength and AI-led strategy position it well to gain market share.

Jefferies also raised its earnings per share (EPS) estimate by 1% and expects a 9% EPS CAGR in FY26-28, adding that superior growth and free cash flow (FCF) conversion will support premium valuations.

Nomura also reiterated its 'Buy' rating, with a target price of ₹1,660, citing strong margin performance in Q2 and expecting normalisation of margins in FY27F. It added that HCLTech is focusing on AI through a services-led, asset-light approach.

Morgan Stanley, which has an 'Equal-weight' rating with a target price of ₹1,680, said that management commentary suggests demand stability to slight improvement, particularly in verticals such as retail and consumer packaged goods (CPG).

However, the brokerage said that the unchanged revenue guidance band and limited clarity on FY27 margins could restrict near-term EPS upgrades.

CLSA maintained its 'Outperform' rating, with a price target of ₹1,660, adding that a key factor for re-rating the stock will be EBIT margin recovery to 18-19% by FY27.

Of the 47 analysts who have coverage on the stock, 21 analysts have a 'Buy' rating, 18 have a 'Hold' rating on the stock, while eight of them have a 'Sell' rating.

Shares of HCLTech are now trading 1.11% higher on Tuesday at ₹1,511.30. The stock has declined 22% so far in 2025.

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