ICICI Securities keeps HCL Technologies at Reduce, target Rs 1,090

what happened

Moneycontrol published ICICI Securities’ research on HCL Technologies, which showed revenue from IT Services and ER&D rising 3% quarter on quarter in constant currency, or 2.3% organically. Management said demand momentum had improved during the final weeks of the Sep-26 quarter and expected Services revenue growth to come in above the midpoint of its guidance. It also said the IT Services industry was in the early stages of AI-led deflation, while demand remained volatile. The product business continued to weigh on overall revenue.

EBIT margin performance was strong, supported by operating leverage, benefits from employee restructuring and a greater contribution from higher-margin AI revenue. ICICI Securities nevertheless expects margins to stay rangebound as HCL Technologies prioritises growth investment. The brokerage retained its Reduce view and raised its target to INR 1,090. Its valuation uses a 15-times FY28E P/E for the services business and a 10-times multiple for the products business.

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why it matters

The report highlights a mixed market signal for HCL Technologies: stronger services demand and EBIT margins are offset by AI-related deflation, uneven demand and continued weakness in products.

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