5 reasons why HCL Tech shares crashed 10%: Targets as m-cap slips below ITC, 4 others

Noida-based HCL Technologies Ltd saw its shares plunge 10 per cent in Wednesday’s trade, as its FY27 guidance fell short of Street expectations and the March quarter results came in weak, leading to target price cuts. Analysts said HCL Tech’s Q4FY26 revenue fell 3.3 per cent quarter-on-quarter (QoQ) to $3,682 million, missing consensus expectations of a 1.6 per cent QoQ decline. Net new deal wins at $1.9 billion declined 35 per cent year-on-year (YoY), while Ebit margin at 16.5 per cent also came in below the consensus estimate of 17.6 per cent. The IT stock declined 9.7 per cent to hit a low of Rs 1,301.60 on BSE, taking its market capitalisation (m-cap) to Rs 3,55,530 crore. Following the decline, shares of the third largest IT firm slipped below ITC Ltd, NTPC Ltd, Kotak Mahindra Bank Ltd, Adani Ports and Special Economic Zone Ltd (Adani Ports) and Oil and Natural Gas Corporation Ltd (ONGC) in the m-cap rankings. 

HCL Tech target prices

Nomura said it reduced its FY27-28 earnings estimates on HCL Tech by 5-7 per cent, factoring in lower growth. It cut its target price to Rs 1,600 from Rs 1,700 earlier.

HCL Tech expects 40 per cent of industry revenue to have deflation of 3-5 per cent due to AI productivity while 55 per cent of revenues to benefit from AI-led tailwinds of higher spends on data, cybersecurity, cloud  and have growth over 10 per cent. 

JM Financial downgraded the stock to 'Reduce' with revised target of Rs 1,350 against Rs 1m440 earlier. The brokerge said its assigned valuations for HCL Tech are at 14 per cent premium over Infosys'. Choice International maintained 'ADD' rating with a revised target price of Rs 1,500 on HCL tech from Rs 1,600.

"The annual TCV of net new bookings was soft at $9.3 billion, reflecting the macroeconomic environment and the deflationary impact of AI on renewals. Margin guidance of 17.5-18.5 per cent was encouraging despite FY26 EBIT margins ending at 17.2%. We cut our EPS estimate by 4 pe cent and maintain BUY with a revised target price of Rs 1,465, based on 18 times FY28E EPS," HDFC Institutional Equities said.

Nuvama said HCL Tech’s weak FY27 guidance now converges its growth differential versus TCS and Infosys, which is likely to lead to convergence of their valuations. It tweaked its FY27 and FY28 earnings estimates and downgraded its target multiple to 18 times FY28 PE and rating to ‘HOLD’ with a target of Rs 1,400 against Rs 1,550.