HCL Tech Q4FY26 miss: 10% drop, FY27 outlook, FII exit

Stock slides after results, becomes top Nifty loser

HCL Technologies shares came under sharp selling after the company posted weaker-than-expected Q4FY26 numbers and set out subdued growth guidance for FY27. The stock was trading around Rs 1,292 at noon on the NSE, down 10.3%, and emerged as the top loser on the Nifty. Reports also cited an intraday dip to around Rs 1,289 on the NSE and Rs 1,301.60 on the BSE in the same session. The fall extended the recent correction in the stock, which has been under pressure amid concerns about demand visibility and the impact of AI on traditional IT services pricing.

FII selling builds over a year

The sell-off also comes against the backdrop of foreign institutional investors reducing exposure to HCL Technologies over the past year. FIIs pared their stake from 19.15% in the March 2025 quarter to 15.5% in the March 2026 quarter. The reported driver behind the broader trimming in IT stocks has been the fear of AI-led disruption, alongside uneven earnings delivery. In HCL Tech’s case, commentary pointed to subdued quarterly earnings over the last one year.

Market value hit: Rs 38,000 crore wiped out

The post-results fall erased a sizeable chunk of market value. One report said the decline wiped out around Rs 38,000 crore in market capitalisation and brought HCL Tech’s total market cap down to about Rs 3,53,000 crore. Another data point put the market cap at Rs 3,55,530 crore after the drop. Either way, the session marked a material reset in how investors were pricing near-term growth and execution risks.

Q4FY26: profit up, but revenue and margins miss

HCL Tech reported net profit of Rs 4,488 crore for Q4FY26, up 10.1% sequentially and 4.2% year-on-year, but below a poll estimate of Rs 4,696 crore. Revenue stood at Rs 33,981 crore, up 0.3% quarter-on-quarter and 12.4% year-on-year, and also missed expectations. Operating performance softened, with EBIT falling 10.6% sequentially to Rs 5,620 crore. EBIT margin narrowed to 16.5% from 18.6% in the previous quarter, below an estimate of 17.6%. In constant currency terms, quarterly revenue declined 3.3% sequentially.

What management flagged: telecom cuts, SAP cancellations

Management attributed the softness to reduced discretionary IT spend and slower decision-making, particularly among two large US telecom clients. It also pointed to the cancellation of two SAP-related projects, and client-specific challenges in retail and manufacturing. These factors are expected to weigh on services growth in FY27 by about 50 basis points. The company also highlighted a weaker outlook in Europe due to geopolitical uncertainties.

AI deflation becomes a key theme in guidance

AI-led pricing pressure featured prominently in the discussion around the quarter and the outlook. One report cited a 200-300 basis point deflationary impact from AI on traditional IT services. Separately, a note cited the company’s view that 40% of industry revenue could face deflation of 3-5% due to AI productivity. It also said 55% of revenues could benefit from AI-led tailwinds such as data, cybersecurity, and cloud, with growth over 10%.

FY27 guidance: growth slows vs FY26 outcome

Alongside the Q4 print, HCL Tech guided for FY27 revenue growth of 1-4% year-on-year in constant currency terms. It also guided services growth at 1.5-4.5% and EBIT margin at 17.5-18.5%. The FY27 revenue growth range is set against the company’s FY26 performance, where it reported 3.9% growth versus its own FY26 guidance of 4.0-4.5%. Services growth in FY26 was reported at 4.8% in constant currency.

Brokerages cut targets; Jefferies turns most bearish

After the miss and guidance, brokerages broadly lowered targets and flagged weak near-term visibility. Jefferies downgraded HCL Tech to “Underperform” and cut its target price to Rs 1,165, citing softer growth prospects and a valuation reset. HSBC maintained “Hold” but reduced its target to Rs 1,480 from Rs 1,560, citing a sharp Q4 miss and weaker FY27 growth outlook, and warning that earnings growth and return ratios may not compound in double digits in the near term. JPMorgan maintained “Neutral” and cut its target to Rs 1,370 from Rs 1,419, flagging continued weakness in telecom and SAP-related demand and noting reinvestment into sales and generative AI capabilities could limit margin expansion. Citi retained “Neutral” and lowered its target to Rs 1,385, pointing to weak revenue growth, deal momentum and guidance. Nomura kept a “Buy” but reduced its target to Rs 1,600 from Rs 1,700 after cutting FY27-28 earnings estimates by 5-7%. CLSA maintained “Outperform” with a target of Rs 1,519, while Motilal Oswal reiterated “Buy” and set a target of Rs 1,650.

Broader market impact: IT drag on indices

The weakness spilled over to the IT pack and weighed on headline indices. Reports noted the Nifty 50 slipped over 200 points, with the IT index down about 3% during the session. Tech Mahindra fell nearly 6% ahead of its results, while Infosys and TCS were down over 4% and 3%, respectively. The day’s action reflected investor concerns around demand visibility, delays in decision-making, and a cautious posture from clients.

Key numbers at a glance

Brokerage targets after results

Why the episode matters for investors

The combination of a Q4 miss, weaker FY27 guidance, and client-specific headwinds has refocused attention on near-term growth durability in large-cap IT. The details flagged by management, including telecom budget cuts and SAP cancellations, suggest that decision cycles and discretionary spends remain uneven. At the same time, the repeated references to AI-driven deflation show how pricing and volumes may shift as automation gets embedded in service delivery. With FIIs reducing holdings over the last year and multiple brokerages cutting targets, HCL Tech’s next few quarters are likely to be watched closely for stabilization in services growth and clarity on how margin guidance is achieved.

Conclusion

HCL Tech’s sharp fall followed a broad reset in expectations after a quarter that missed on revenue and margins and a FY27 outlook that came in below market comfort levels. Brokerages have lowered targets, citing telecom weakness, SAP-related cancellations, and the deflationary impact of AI on parts of the services stack. Investors will track upcoming quarters for signs of demand recovery, the trajectory of deal momentum, and execution against the FY27 revenue growth and margin guidance provided by the company.