Brokerage house Geojit has upgraded HCL Technologies to a 'Buy' rating, setting a target price of Rs 1,459 per share. The upgrade follows the company’s recent first-quarter results for fiscal 2027, which showed double-digit revenue growth. While strong deal bookings support the company's outlook, investors are balancing these gains against continued pressure on profit margins.
Geojit Financial Services has upgraded its rating on HCL Technologies to 'Buy,' setting a target price of Rs 1,459. This change in outlook comes after the IT services company released its performance data for the first quarter of fiscal year 2027 (Q1 FY27), reflecting a mix of strong demand and operational challenges.
During the quarter ended June 2026, HCL Technologies reported a consolidated revenue of Rs 34,579 crore, marking a 13.9% increase compared to the same period last year. The company’s net profit, or Profit After Tax (PAT), also saw a solid rise, growing 20.3% year-on-year to Rs 4,626 crore. A key highlight from the company's performance was its ability to secure new work, achieving record net new bookings of $2.4 billion for the quarter. This strong demand for services, particularly in engineering and business solutions, forms the foundation of the brokerage’s optimistic view on the company's medium-term prospects.
However, the company’s financial performance also reveals areas of caution that investors should consider. While revenue grew, the company faced difficulty in maintaining its desired profit margins. The EBIT (Earnings Before Interest and Taxes) margin for the quarter stood at 16.86%. This performance fell short of the company’s internal guidance for the full fiscal year, which aims for a range between 17.5% and 18.5%. The gap suggests that rising employee costs and changes in how the company delivers its services are putting pressure on profitability.
Management has maintained its revenue growth guidance for the fiscal year 2027 in the 1.0% to 4.0% range. This indicates that while the company is confident in its ability to secure deals, it remains cautious about the pace of growth given the broader economic environment and the current trend of restrained spending by clients in certain sectors.
For investors, the key monitorable will be how effectively HCL Technologies can improve its margins in the coming quarters. While the Rs 2.4 billion in new deal bookings is a positive sign for future revenue, the actual benefit for shareholders will depend on the company's ability to convert these deals into profitable growth without letting costs outpace earnings. Investors may track whether the company can steer its margins back toward the 17.5%–18.5% guidance range in future quarters, which would be a sign of better operational efficiency. As of mid-August 2026, the stock has been trading in the range of Rs 1,306 to Rs 1,320, reflecting some positive momentum following the result announcements.