With today’s decline, nearly Rs 59,000 crore in market capitalisation has been erased over the last three days.
The sharp sell-off follows weak guidance that triggered a series of downgrades and target price cuts. The IT major has projected FY27 revenue growth of 1% to 4% year-on-year in constant currency terms. The company also missed its FY26 growth guidance of 4.0% to 4.5%, reporting 3.9%. In addition, its services growth outlook of 1.5% to 4.5% is significantly below the 4.8% year-on-year constant currency growth delivered by the segment in FY26.
What should you do with HCL Tech shares?
Wall Street major Jefferies is the biggest critic of the lot, downgrading the HCL Tech shares to Underperform with a price target of Rs 1,165, one of the lowest on the Street.
“We expect HCLT’s organic revenue growth in FY27 to be 2.4%, the lowest since FY23,” the brokerage said, cutting its target price-to-earnings multiple from 18x to 16x. “Weaker growth expectations will lead to PE derating, especially when HCLT is trading at a 16% premium to TCS, despite a similar growth outlook.” Jefferies cut its FY27–28 EPS estimates by 1–2% and now expects an 8% recurring EPS CAGR over FY26–29.
JPMorgan has maintained a Neutral rating on HCLTech and lowered its target price to Rs 1,370 from Rs 1,419, while HSBC has retained a Hold rating on HCLTech shares and cut its target price to Rs 1,480 from Rs 1,560.
The brokerage said the company’s Q4FY26 performance was a sharp miss, which has also led to weaker-than-expected growth guidance for FY27. The miss was primarily due to unexpected budget cuts at key US telecom clients and the cancellation of a few SAP projects. HSBC added that earnings growth and stock returns are unlikely to compound at double-digit rates in the near term.
Citi maintained Neutral but cut its target price to Rs 1,385, calling it “a weak 4Q — revenues, deal TCV, growth outlook — all below expectations.” The brokerage flagged deteriorating forward indicators: TTM deal TCV up just 1% YoY, headcount growth of 1.7% YoY, and management’s commentary on reduced discretionary spend in telecom and the discontinuation of two SAP programmes. Citi trimmed FY27–28 EPS estimates by 1–2%, warning that “weak guidance will weigh on the stock in the near term.”
On the contrary, CLSA retained its Outperform rating with a target of Rs 1,519, though it acknowledged the quarter was “disappointing” across revenue, EBIT margins, order book, and FY27 guidance, and flagged “limited visibility regarding offsetting the potential AI deflation to revenues through incremental volumes.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)