HCL Technologies shares fell nearly 4% on July 15 after the company posted lower-than-expected earnings for the first quarter of FY26. The IT giant reported a 10% drop in net profit, which came in at ₹3,843 crore compared to ₹4,257 crore in the same period last year.
But that’s not all. The company also reported a fall in operating margin to 16.3%, a sharp dip from 17.9% in the previous quarter. That’s a hit of 160 basis points. As a result, HCL Technologies lowered its full-year operating margin guidance to 17-18%, down from the earlier 18-19%.
So, should you panic or hold on?
Let’s break it down.
Revenue: Not all bad
While profits dipped, revenue actually grew. HCL Technologies posted ₹30,349 crore in revenue, an 8% rise compared to ₹28,057 crore last year. It also raised the upper end of its FY26 growth forecast from 2-5% to 3-5%. That’s a small silver lining.
What are analysts saying?
Nuvama Institutional Equities downgraded the stock to hold, cutting the target price to ₹1,630 from ₹1,700. They pointed to margin concerns but said things might stabilise by Q4FY26.
Emkay Global wasn’t too impressed either. It kept a reduce call and cut the target to ₹1,660. The key issue? Margins again.
Citi Research stayed neutral with a ₹1,650 target. It found some strength in BFSI and tech verticals but flagged weakness in others.
But it’s not all negative.
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The bullish side
CLSA remained hopeful, keeping its outperform rating with a ₹1,867 target. They believe HCL Technologies will bounce back to 18-19% margins by FY27.
Even stronger was Jefferies, which upgraded the stock to buy with a target of ₹1,850. According to them, HCL Technologies showed the highest growth guidance among the top five IT companies. They also expect strong returns from current investments in AI and digital tech.
So, buy, sell, or hold?
If you’re a long-term investor, this may be a “hold and wait” moment. Yes, the profit dip is real. Yes, margins are under pressure. But growth is still coming in, and the company is investing for the future. If you’re in for the long haul, it’s not time to exit just yet.
For short-term traders, caution is key. The next few quarters may stay choppy.
Disclaimer:
This article is for informational purposes only and is not financial advice. Please consult a certified advisor before making investment decisions.
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