HCL Tech Stock Suffers 8% Decline Following Q4 Earnings Miss and Downgraded FY27 Outlook

HCL Technologies Stock Falls 8.6 Percent After Weaker-Than-Expected Q4 Results

HCL Technologies Ltd, a leading Indian IT major, saw its stock plummet 8.6 percent in the morning session on Wednesday after the company reported weaker-than-expected Q4 results and issued subdued growth guidance for FY27. At the time of writing, shares of HCL Technologies Ltd were trading at Rs 1,317.1.

Brokerages Turn Cautious on Outlook

Brokerages broadly turned cautious on the outlook, cutting target prices and flagging weak near-term growth visibility following misses across key financial metrics. The HCL Tech stock has declined about 11 percent over the past one year, compared with a 1.1 percent gain in the Nifty 50.

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Q4FY26 Results Disappoint

The IT major reported net profit of Rs 4,488 crore for Q4FY26, up 10.1 percent sequentially and 4.2 percent year-on-year, but below the CNBC-TV18 poll estimate of Rs 4,696 crore. Revenue stood at Rs 33,981 crore, rising 0.3 percent quarter-on-quarter and 12.4 percent year-on-year, also missing expectations. In dollar terms, revenue came in at $3.68 billion versus estimates of $3.76 billion.

Operating Performance Disappoints

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Operating performance also disappointed, with EBIT falling 10.6 percent sequentially to Rs 5,620 crore, while margins contracted to 16.5 percent from 18.6 percent in the previous quarter, missing estimates of 17.6 percent. Constant currency revenue declined 3.3 percent sequentially, reflecting continued weakness in the software business, where revenue dropped sharply during the quarter.

Management Cites Reasons for Miss

Management attributed the miss to lower discretionary spending and delays in decision-making, particularly in telecom, along with cancellations of certain SAP programmes. While IT and business services and ER&D segments saw modest growth, a sharp decline in software revenue weighed on overall performance. The company reported total contract value of $1.94 billion for the quarter, while attrition stood at 12.5 percent.

FY27 Guidance Dampens Sentiment

The outlook further dampened sentiment, with HCL Tech guiding for FY27 revenue growth of 1-4 percent in constant currency, below Street expectations. Services growth is expected at 1.5-4.5 percent, while EBIT margin is guided at 17.5-18.5 percent. Management said its focus remains on positioning the company for AI-led opportunities, with annualised advanced AI revenues crossing $620 million.

Brokerage Views

Several brokerages have revised their views on HCL Technologies following the Q4 results. HSBC retained a 'Hold' rating but cut its target price to Rs 1,480 from Rs 1,560, citing a sharp Q4 miss and weaker FY27 growth outlook. JPMorgan maintained a 'Neutral' rating and lowered its target to Rs 1,370 from Rs 1,419, highlighting revenue, margin and EPS misses. Citi also maintained a 'Neutral' stance with a reduced target of Rs 1,385, pointing to weak revenue growth, deal momentum and guidance. Nomura remained constructive with a 'Buy' rating but cut its target price to Rs 1,600 from Rs 1,700. CLSA maintained an 'Outperform' rating with a target of Rs 1,519, but flagged disappointing execution, weak order book and limited visibility on offsetting AI-led deflation.