HCL Tech stock falls after disappointing Q1 FY26 results with 10% YoY profit drop and margin compression. Analysts cite ₹1,500 as a strong support level, urging investors to adopt a buy-on-dips approach amid expectations of a Q2 recovery.
Mumbai, July 15, 2025:
Shares of HCL Technologies came under selling pressure on Tuesday following the company’s announcement of its Q1 FY26 results on Monday. The stock opened with a downside gap at ₹1,590 on the NSE and touched an intraday low of ₹1,568.30, registering a nearly 3% decline from its previous close of ₹1,619.80 per share.
Q1 FY26 Results: Key Highlights
India’s third-largest IT services company by market capitalisation reported a 10% year-on-year (YoY) decline in consolidated net profit to ₹3,843 crore. This decline came despite an 8.2% YoY increase in revenue to ₹30,349 crore, reflecting challenging macroeconomic conditions and sectoral headwinds.
According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, the fall in profitability is largely due to lower utilisation rates and strategic investments in generative AI and go-to-market (GTM) initiatives. The operating margin dropped 160 basis points (bps) sequentially to 16.3%, prompting the company to revise its FY26 EBIT margin guidance downward from 18–19% to 17–18%.
In contrast, revenue growth guidance was modestly raised to 3–5% in constant currency, signalling cautious optimism. However, net new deal wins declined significantly to $1.81 billion, compared to $3 billion in the previous quarter, owing to procedural delays in closing large deals.
Despite these short-term challenges, CEO C Vijayakumar remained optimistic, citing stable demand conditions and a healthy pipeline, especially in AI-led solutions, supported by HCL’s OpenAI partnership.
Strong cash flow metrics (Operating Cash Flow/Net Income at 129%, Free Cash Flow/Net Income at 121%) and a rising Return on Invested Capital (ROIC) of 38.1% reflect operational resilience. The company also announced an interim dividend of ₹12 per share, reaffirming its commitment to shareholder returns.
Analyst View: Buy on Dips
Sumeet Bagadia, Executive Director at Choice Broking, recommends a buy-on-dips strategy, citing strong technical support at ₹1,500 and resistance at ₹1,700.
“As long as HCL Tech trades above ₹1,500, the stock looks technically positive. Investors can consider accumulating on dips with a short-term target of ₹1,700,” Bagadia stated.
Citi, meanwhile, revised its price target slightly downward from ₹1,690 to ₹1,650, factoring in the short-term headwinds.
While HCL Tech’s Q1 FY26 performance has disappointed the markets, particularly in terms of margins and deal momentum, analysts remain optimistic about the company’s longer-term growth prospects — particularly in the realm of AI and digital transformation. With solid fundamentals and technical support, the current dip is seen as an opportunity by many experts.