MOFSL IT calls 2026: Buy HCL, Persistent; Sell Elxsi

What changed in MOFSL’s latest IT view

Motilal Oswal Financial Services (MOFSL) reiterated its stance on three widely tracked IT names after a mix of softer guidance and March quarter (Q4) signals. The brokerage maintained a Buy on HCL Technologies despite what it called soft FY27 guidance and muted March quarter results. It also reiterated a Buy on Persistent Systems even as it flagged a soft exit in core growth.

In contrast, MOFSL retained a Sell on Tata Elxsi, citing delays in deal ramp-ups that weighed on Q4 growth and a guidance reset amid uneven recovery across verticals. MOFSL’s target prices implied 15-16% upside for HCL Tech and Persistent Systems, and 28% downside for Tata Elxsi.

MOFSL target prices and implied upside or downside

For investors, the key takeaway is the relative preference within the sector rather than a blanket view on IT. MOFSL’s implied return expectations separated “better-positioned” names from those facing execution and demand visibility issues.

• HCL Technologies: Target price ₹1,650, implied upside 15%
• Persistent Systems: Target price ₹6,200, implied upside 16%
• Tata Elxsi: Target price ₹3,350, implied downside 28%

HCL Technologies: Q4 profit and revenue growth, but growth expectations moderated

HCL Technologies reported year-on-year growth in both profit and revenue for the March quarter. Consolidated profit rose 4.2% to ₹4,488 crore from ₹4,307 crore. Revenue increased 12.3% to ₹33,981 crore from ₹30,246 crore.

In dollar terms, revenue rose 5.3% to $1,682 million from $1,498 million. Alongside the Q4 print, MOFSL indicated it now expects 3% organic services growth.

Persistent Systems: fifth straight quarter of deceleration in revenue growth

MOFSL said Q4 marked the fifth consecutive quarter of deceleration in revenue growth for Persistent Systems when excluding software licenses, even though it remains one of the faster-growing IT services companies within MOFSL’s coverage.

The brokerage noted March quarter revenue grew 3.4% quarter-on-quarter in constant currency terms, which it called a slight miss versus consensus. It added that revenue growth (excluding software licenses) softened to 15% year-on-year in Q4.

On reported profitability, Persistent Systems posted Q4 profit up 33.7% year-on-year to ₹529.3 crore from ₹395.8 crore.

Persistent Systems: what MOFSL changed in forecasts

MOFSL said it now builds in a 16% dollar revenue CAGR for FY26-28E for Persistent Systems, reflecting moderation in core growth. With gradual margin expansion, MOFSL said this implies 20-22% EPS CAGR, still among stronger growth profiles in mid-tier IT, though lower than earlier expectations.

The brokerage said it cut earnings estimates by 4-5%, factoring in a soft Q4 exit and continued reinvestments in AI platforms and consulting capabilities. It now assumes a more gradual margin expansion to 16.7-16.8% over FY27-28E.

Tata Elxsi: deal delays, conservative outlook, and dividend

MOFSL retained its Sell rating on Tata Elxsi, pointing to delayed deal closures and elongated decision cycles. While it acknowledged modest growth in Q4, it said the outlook has turned more conservative, with FY27 growth guided to high-single digits.

In the March quarter, Tata Elxsi reported profit up 27.8% year-on-year to ₹220.4 crore from ₹172.4 crore and revenue up 9.4% to ₹993.8 crore from ₹908.3 crore. The board also recommended a dividend of ₹75 per share for FY26.

MOFSL said it expects dollar revenue growth of 7% CAGR over FY26-28 for Tata Elxsi and noted it revised FY27/FY28 estimates by 1%.

Stocks to watch and the earnings calendar around April 22

A broader “stocks in focus” list for April 22 included HCL Technologies, Tata Elxsi, Cyient DLM, 360 ONE WAM, Persistent Systems, Sunteck Realty, PNC Infratech, Aurobindo Pharma, BEML, and others.

The day’s results lineup included SBI Life Insurance Company, Tech Mahindra, Trent, Bharat Coking Coal, Delta Corp, Havells India, L&T Technology Services, Maharashtra Scooters, Oracle Financial Services Software, Sangam India, and Tata Communications.

Where the stocks were trading

During the session referenced, HCL Technologies traded at ₹1,345.10 on NSE, up 0.85% or ₹11.40 from the previous close of ₹1,333.70. Persistent Systems traded at ₹4,720.40, up 0.078%. The note also mentioned both stocks opened lower before recovering and holding gains even as the broader market fell.

Separately, a market snapshot referenced HCLTECH at ₹1,303.20, down 1.67% on that reading, indicating the stock’s pricing context has varied across dates and sessions.

How other broker views compared: UBS, CLSA, and Jefferies

A UBS note cited Persistent Systems and HCL Technologies among better-positioned companies in the sector, alongside Infosys among large caps. It also noted Persistent trading at a P/E ratio of 42.75, and referenced its 52-week range of ₹4,148.95 to ₹6,599.00.

CLSA, meanwhile, said a turnaround in earnings growth would matter more than management commentary, and flagged 5-10% downside risk to sector stock prices. It listed HCL Tech as Hold with a target price cut to ₹1,506 from ₹1,661, and Persistent Systems as Outperform with a target price cut to ₹8,058 from ₹8,865.

Jefferies cut EPS estimates by 1-4% and reduced price targets by up to 33%, downgrading Infosys, HCL Technologies, and Mphasis to Hold, while preferring names such as Coforge, Sagility, and IKS Health despite its broader caution.

Key numbers at a glance

What this means for investors tracking IT earnings

MOFSL’s calls underline a familiar split in the sector: companies with steadier execution and visibility continue to attract Buy ratings even when near-term guidance softens, while names facing deal timing issues can see sharper de-rating risk. For Persistent Systems, the focus in investor discussions remains whether deal wins and conversion timelines can offset macro headwinds in specific verticals, as highlighted in separate commentary.

For Tata Elxsi, MOFSL’s Sell stance is tied to ramp-up delays and a more conservative growth framework. For HCL Tech, the debate is less about Q4’s headline year-on-year growth and more about how quickly services growth stabilises under the updated expectations.

Conclusion

MOFSL kept Buy ratings on HCL Technologies and Persistent Systems with target prices implying mid-teen upside, while maintaining a Sell on Tata Elxsi with a sharply lower implied return profile. The next set of management commentary and quarterly follow-through, particularly on growth moderation and deal conversion, will remain central as the earnings season progresses.