HCLTech Q4FY26: Stock Slides 10% as FY27 Growth Guide Drops

Market reaction: HCLTech hits day’s low on NSE

HCL Technologies (HCLTech), India’s third-largest software services firm, came under heavy selling on Wednesday after its Q4FY26 results and FY27 outlook failed to meet Dalal Street expectations. The stock plunged as much as 9.58% to a day’s low of Rs 1,303 on the NSE. On the BSE, it touched an intra-day low around Rs 1,301.60, with some reports noting the stock fell close to 10% in trade.

In early trade, HCLTech was also cited as the top loser on the Nifty, trading near Rs 1,317.1, down about 8.6%. The sharp move reflected a combination of a quarterly miss across key metrics and subdued growth visibility for FY27. Over the past one year, the stock has declined about 11%, compared with a 1.1% gain in the Nifty 50.

Q4FY26 profit rises, but the print disappoints

HCLTech reported a consolidated net profit of Rs 4,488 crore for the March quarter, up 4.2% year-on-year from Rs 4,307 crore. On a sequential basis, net profit rose 10.1%, according to the figures cited alongside Street estimates. Despite the growth, the profit number was below the CNBC-TV18 poll estimate of Rs 4,696 crore.

Revenue from operations for Q4FY26 came in at Rs 33,981 crore, up 12% year-on-year from Rs 30,246 crore. In dollar terms, revenue was reported at $1,682 million, down 2.9% sequentially but up 5.3% from the year-ago period. The market focus, however, stayed on the gap versus expectations and what it implied for near-term demand.

Margin pressure shows up in EBIT and profitability

Operational performance also drew attention. EBIT was reported at Rs 5,620 crore versus an estimated Rs 5,931 crore, signalling weaker-than-expected operating efficiency in the quarter. EBIT margin came in at 16.5% compared with an estimated 17.6%.

The margin discussion fed into broker commentary that flagged execution issues and the likelihood of a slower margin improvement path than previously expected. While some broker notes referenced potential margin normalisation through FY27, the immediate quarter’s outcome weighed on sentiment.

FY27 guidance: 1% to 4% CC revenue growth

The bigger trigger for the sell-off was FY27 guidance. HCLTech guided for revenue growth of 1% to 4% year-on-year in constant currency terms. Within this, services revenue is expected to grow between 1.5% and 4.5%.

The company also guided for an EBIT margin range of 17.5% to 18.5% for FY27. Even with the margin band, investors and analysts reacted to the growth outlook because it was described as below Street expectations, reinforcing concerns about discretionary demand.

FY26 guidance miss adds to the caution

HCLTech also missed its FY26 revenue growth guidance. What was projected at 4% to 4.5% growth came in at 3.9% for the year. That shortfall mattered because FY27 guidance was already being read as conservative.

For the full year FY26, the company reported net profit of Rs 16,642 crore, down 4.3% from Rs 17,390 crore in FY25, even as FY26 revenue rose 11.18% to Rs 130,144 crore. The combination of revenue expansion with profit decline kept focus on margins, deal mix, and costs.

What management cited: telecom pullback and SAP cancellations

Management attributed the quarterly miss to reduced discretionary spending and delays in decision-making, particularly in telecom. Multiple broker notes also pointed to reduced discretionary spending by two large US telecom clients and the cancellation of two SAP projects as key factors.

HDFC Securities noted that services revenue declined 0.1% quarter-on-quarter in constant currency terms, with weakness visible across services, ER&D, and software segments. The softness was linked to a slowdown in the telecom vertical and a ramp-down in SAP-related work.

Deal wins and bookings: another pressure point

Deal momentum also came under scrutiny. Net new deal wins were reported at $1.9 billion, down 35% year-on-year. A separate disclosure cited annual TCV of net new bookings at $1.3 billion, described as soft amid macro conditions and AI-related deflationary impact on renewals.

Some commentary also referenced delays in deal closures, influenced by factors including the US government shutdown and the ongoing crisis in West Asia. Geographically, Europe was described as weak due to geopolitical uncertainties, while North America was relatively stable apart from the client-specific issues.

AI revenue focus, but near-term math remains tight

HCLTech highlighted progress in AI-linked work. Revenue from advanced AI stood at $155 million during the quarter, reflecting a 6.1% sequential rise in constant currency terms. Management also said annualised advanced AI revenues crossed $120 million.

Brokerages, however, debated how quickly AI-led opportunities can offset softness in discretionary spend, especially in telecom. One note flagged AI-led deflation as a factor in renewals, while another pointed to AI productivity potentially pressuring revenue in parts of the book.

Broker calls: target cuts across the board

Brokerages broadly retained their ratings but cut target prices and, in some cases, earnings estimates.

• Nomura maintained a Buy rating and cut its target price to Rs 1,600 from Rs 1,700, citing weaker-than-expected FY27 growth guidance. It flagged two client-specific issues that could shave around 50 basis points from FY27E growth and cut FY27 and FY28 EPS estimates by about 5% to 7%.
• JPMorgan maintained a Neutral rating and lowered its target price to Rs 1,370 from Rs 1,419, citing misses on revenue, margins and earnings. It said overall revenue was 2% below estimates and services revenue trailed by 130 basis points versus its projections.
• HSBC retained a Hold rating and cut its target price to Rs 1,480 from Rs 1,560, pointing to a sharp miss and weaker FY27 growth outlook. It added that earnings growth and stock returns are unlikely to compound at double-digit rates in the near term.
• Motilal Oswal maintained a Buy rating but reduced its target price to Rs 1,650 from Rs 1,700, citing client-specific challenges and weakness seen in March.
• HDFC Securities maintained a Buy rating and revised its target price downward to Rs 1,465.

Key numbers at a glance

What investors will track next

The immediate questions for investors centre on whether telecom-related cuts stabilise and whether the SAP cancellations remain isolated or spread to adjacent programmes. Another area to watch is whether deal closures improve after the disruptions and delays cited by brokerages.

Market participants will also monitor how HCLTech balances investment in sales and capability-building while aiming for the FY27 EBIT margin band of 17.5% to 18.5%. With multiple brokerages highlighting limited near-term visibility, subsequent quarterly commentary on discretionary spending will likely drive stock reaction.

Conclusion

HCLTech’s sharp stock fall followed a Q4FY26 miss and a FY27 constant currency revenue growth guide of 1% to 4%, with telecom and SAP-related issues cited as key drags. Brokerages largely maintained their ratings but cut target prices and, in several cases, trimmed EPS estimates. The next set of management updates on client-specific headwinds, deal conversion, and execution against the FY27 margin band will be central to sentiment.