LKP Research downgraded HCL Technologies to hold with a target price of Rs 1360. The company reported mixed Q2FY27 results as software business revenue fell. While EBIT margins showed growth, many analysts worry about macroeconomic uncertainty. Management kept its revenue guidance, but experts now suggest a cautious approach for investors.
LKP Research's research report on HCL Technologies HCL Technologies Ltd (HCL) reported a mixed set of Q2FY27 results, with healthy services growth and a better-than-expected margin performance offset by softerthan-anticipated revenue growth and continued weakness in the software business. Revenue grew 2.3%/2.6%, QoQ/YoY in constant currency (CC) terms to USD 3.72bn, with services revenue increasing 3.0%/4.0% QoQ/YoY CC, while HCL Software declined 5.8%/11.2% QoQ/YoY CC, due to the timing of multi-year licence renewals. EBIT margin expanded sharply by 130bps QoQ to 18.2%, comfortably ahead of our estimates, driven by Project Ascend efficiencies, operating leverage and highermargin advanced AI offerings. Deal bookings remained healthy at USD 3.3bn, while management retained its FY27 revenue growth guidance of 2.5-4.0% in CC terms and EBIT margin guidance of 17.5-18.5%. Outlook However, low-single-digit organic growth, macroeconomic uncertainty and the nascent risk of AI-led deflation constrain earnings visibility and valuation upside. Accordingly, we downgrade HCLT from BUY to HOLD, with an unchanged target price of ₹1,360, valuing the company at 17x FY28E EPS. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. HCL Technologies - 1410026 - lkp