HCL Tech shares: Choice sees 15% upside, bullish on AI strategy; key details

Brokerage firm Choice Institutional Equities has maintained a 'Buy' rating on HCL Technologies, highlighting the IT major’s robust Q2 performance and notable progress in its Artificial Intelligence (AI) strategy. The firm has revised its target price to Rs 1,720 per share.

The new target implies a potential upside of 15.1 per cent from HCL Tech’s current market price of Rs 1,495, as noted on October 14. On Tuesday, the stock was trading 0.98 per cent higher at Rs 1,509.35.

Choice Institutional Equities highlighted that HCL Tech's strategic investments are yielding positive results, as reflected in its second-quarter earnings. The brokerage is optimistic about the company's focus on AI, which it believes will drive future growth. "The company's strategy is to invest in building intellectual property, deepening partnerships and strengthening go-to-market delivery teams to scale up AI adoption for clients," the report stated. It added, "This, we believe, would lead to improved financial performance for HCLT, going ahead".

Q2 Performance

According to the Choice note, HCL Tech's results for the September quarter (Q2FY26) surpassed expectations on multiple fronts.

Revenue: The company's revenue for Q2FY26 stood at Rs 319.4 billion, a growth of 5.2 per cent quarter-on-quarter (QoQ) and 10.7 per cent year-on-year (YoY). In dollar terms, revenue was $3,644 million, up 2.8 per cent sequentially.

EBIT: Earnings Before Interest and Taxes (EBIT) came in at Rs 55.5 billion, a significant jump of 12.3 per cent QoQ.

Margins: The EBIT margin expanded to 17.5 per cent, up 116 basis points from the previous quarter.

Profit After Tax (PAT): Net profit for the quarter was Rs 42.3 billion, marking a 10.2 per cent increase QoQ.

AI-powered growth and deal wins

A key highlight for HCL Tech has been its progress in AI. The company achieved a major milestone by generating over "$100 million in advanced AI revenue," which now contributes 3 per cent to its top-line. The brokerage noted that the company's focus on IP-led AI solutions and expansion of AI-driven services will be a long-term growth driver.

The company's deal pipeline remains robust. HCL Tech reported net new Total Contract Value (TCV) bookings of $2.56 billion in Q2FY26, a surge of 41.8 per cent QoQ, achieved without any mega-deal closures. The management aims for a steady quarterly TCV run-rate of around $2.5 billion.