Brokerage firm Prabhudas Lilladher has maintained a 'Hold' rating on HCL Technologies with a target price of ₹1,230. The decision follows the company's Q2 FY27 results, where it reported a 21.2% jump in net income. Despite record deal bookings and strong AI adoption, management remains cautious about future growth, leading the brokerage to keep a steady stance on the stock.
HCL Technologies released its financial results for the second quarter of the 2027 fiscal year, reporting a net income of ₹5,132 crore, a 21.2% increase compared to the same period last year. Revenue for the quarter rose by 11.5% to reach ₹35,620 crore. Despite these gains, brokerage firm Prabhudas Lilladher has maintained a 'Hold' rating on the stock with a target price of ₹1,230.
Operational Efficiency and AI Growth
The company’s profitability metrics showed improvement, with EBIT margins expanding to 18.2%, reflecting a 131 basis point increase quarter-on-quarter. A significant driver of this performance was the Advanced AI division, which recorded revenue of $219 million, marking a 78% growth in constant currency terms. This expansion suggests that the company's focus on integrating higher-value artificial intelligence services is beginning to reflect in its operating efficiency.
Why the Brokerage Remains Cautious
While HCL Technologies achieved record net new bookings of $3.26 billion during the quarter, the management has maintained a conservative outlook on future growth. This guidance, coupled with a volatile global business environment, serves as the primary reason for the 'Hold' stance by the brokerage. Investors are balancing the strong deal pipeline against potential macroeconomic headwinds that could impact spending in key markets.
Challenges in the Software Segment
The company's performance has not been uniform across all divisions. The HCLSoftware segment reported an 11.2% decline in revenue. This contraction is linked to the company’s ongoing strategic transition from traditional one-time licensing models to subscription-based recurring revenue streams. While this shift is intended to create long-term stability, it currently exerts pressure on the segment's topline growth.
Dividend and Future Monitorables
Alongside the quarterly results, HCL Technologies declared an interim dividend of ₹12 per share. Investors holding the stock should note that the record date for this dividend is October 16, 2026. Looking ahead, shareholders may track how the company manages deflationary pressures in its legacy service contracts. Additionally, the ability of the software division to stabilize its revenue and the impact of any changes in global immigration policies on workforce mobility remain important factors that could influence future performance.