HCL Technologies gains growth visibility from record bookings and AI investments

Investment View and Valuation

Geojit Investments Ltd. upgraded HCL Technologies to BUY in its August 19, 2026 report, citing resilient execution, strong large-deal wins, robust bookings and improving medium-term growth visibility. The broker believes broad-based deal momentum, expansion of large-account relationships, disciplined operational execution and investments in AI capabilities can support profitable growth despite a mixed demand environment.

The revised target price is Rs 1,459, compared with a CMP of Rs 1,300, based on 19 times FY28E adjusted EPS.

Q1 FY27 Financial Performance

HCL Technologies reported consolidated Q1 FY27 revenue of Rs 34,579 crore, increasing 13.9 per cent year-on-year and 1.8 per cent sequentially. Growth was broad based across business verticals.

IT and business services growth was supported by traction in the core services portfolio and growth in large client accounts. The EBITDA margin remained stable at 19.9 per cent, as higher employee expenses, which rose 11.9 per cent year-on-year, partly offset the revenue-led operating improvement.

Record Deal Bookings and Growth Guidance

Management reported net new total contract value of US$2.4 billion in Q1 FY27, the highest first-quarter booking level for HCL Technologies. Deal wins were broad based across service lines, verticals and geographies and excluded the large deal signed in early July.

On a year-on-year basis, the company added one client in the US$100 million-plus revenue category, six in the US$50 million-plus category, 11 in the US$20 million-plus category and 31 in the US$10 million-plus category.

HCL Technologies maintained its FY27 organic revenue growth guidance of 1-4 per cent and margin guidance of 17.5-18.5 per cent. Management highlighted divergent demand conditions: AI-native and AI-amplified services are growing strongly, while traditional commoditised services continue to face optimisation.

AI Investments and Strategic Initiatives

HCL Technologies announced its entry into the AI data-centre business, with an initial investment of up to Rs 3,500 crore and a long-term plan to scale its full-stack AI infrastructure model to 50 MW.

The company also announced a US$150 million investment in Sarvam, created a dedicated Gemini Enterprise business unit with Google Cloud and expanded its AI Innovation Zones with Google Cloud and Intel. In addition, HCL Technologies has an AWS AI Services Competency.

Its industry AI portfolio expanded to 23 solutions, including AI for store operations, an order-to-cash platform and an intelligent validation and quality platform.

Earnings Estimates

Geojit expects revenue, EBITDA and adjusted PAT to increase through FY27E and FY28E. Adjusted EPS estimates were raised by 2.4 per cent for FY27E and 1.8 per cent for FY28E.

Key Constraints and Risks

• Caution in discretionary spending.
• Continued optimisation in traditional services.
• Weakness in select verticals.
• Potentially uneven near-term growth.