Brokerage Anand Rathi has upgraded HCL Technologies to 'Buy' following a strong second-quarter performance. The company reported a 21.2% jump in net profit, driven by high demand for its advanced AI services. While new deal bookings remain strong, investors should note the company’s narrowed revenue growth guidance and global economic uncertainties.
Brokerage firm Anand Rathi has upgraded HCL Technologies to a Buy rating, establishing a target price of ₹1,435 per share. The upgrade follows the company’s second-quarter financial results for fiscal year 2027, where strong operational efficiency and a surge in artificial intelligence revenue caught the attention of market analysts.
HCL Technologies reported a net profit of ₹5,132 crore, representing a 21.2% increase compared to the same quarter last year. Revenue for the period reached ₹35,620 crore, an 11.5% growth on a year-on-year basis. One of the most significant metrics for shareholders was the expansion of operating profit margins, which grew by 131 basis points sequentially to 18.2%. This improvement highlights the company's success in managing its operational expenses more effectively.
A central factor in the brokerage's decision is the company's aggressive move into artificial intelligence. Revenue from the Advanced AI unit climbed to $219 million, a 78% increase over the previous year. This suggests that HCL is successfully scaling its AI offerings, which are generally more valuable and harder for competitors to replicate. Additionally, the company recorded $3.3 billion in new deal bookings, a 27% rise compared to the same period last year. These bookings act as a lead indicator, suggesting a stable flow of work in the coming quarters.
Despite the positive performance, investors should carefully consider the broader outlook. HCL Technologies has narrowed its revenue growth guidance for the full fiscal year 2027 to between 2.5% and 4%. This revision signals caution, largely due to ongoing macroeconomic volatility and potential constraints on global IT spending. While AI is a clear growth engine, the majority of the company's revenue still comes from traditional IT services, which remain sensitive to global economic slowdowns and intense competition from other service providers.
For investors, the most critical monitorable will be the company’s ability to turn its healthy deal pipeline into realized revenue while maintaining its expanded profit margins. The market will also look for management commentary on how global enterprise spending trends evolve, particularly as the IT industry balances the high cost of investing in AI infrastructure against the need to deliver consistent bottom-line returns.