HCL Technologies stock fell sharply on Wednesday after the company reported weaker-than-expected Q4 results and issued subdued growth guidance for FY27. Shares of HCL Technologies Ltd were trading at Rs 1,292 at noon, down 10.3 percent on the NSE, emerging as the top loser on the Nifty.

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.

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 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 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.

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.

Brokerages cautious on HCL Tech; cut target prices, trim earnings estimates

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. The brokerage highlighted budget cuts at top US telecom clients and SAP project cancellations as key drags. It added that earnings growth and return ratios are unlikely to compound in double digits in the near term.

JPMorgan maintained a ‘Neutral’ rating and lowered its target to Rs 1,370 from Rs 1,419, highlighting revenue, margin and EPS misses. The brokerage warned that weakness in telecom and SAP-related demand could persist into FY27.

Citi also maintained a ‘Neutral’ stance with a reduced target of Rs 1,385, pointing to weak revenue growth, deal momentum and guidance. It said that discretionary spending cuts in telecom and SAP cancellations affected performance. The brokerage added that while near-term outlook remains weak, the company may be relatively better placed over the medium term.

Nomura remained constructive with a ‘Buy’ rating but cut its target price to Rs 1,600 from Rs 1,700. It cited an all-round miss and weaker growth outlook, along with EPS downgrades of 5-7 percent for FY27-28. 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.