HCLTech Share Price: Analysts raise targets after Q3, but valuations cap upside

Shares of HCL Technologies Ltd. will be in focus on Tuesday, January 13, following a strong December-quarter performance. HCLTech reported constant-currency revenue growth of 4.2% for the quarter, well above estimates of 2.9%.

Adjusted EBIT margin came in at 18.6%, also ahead of expectations of 18.3%.

The company flagged a one-time impact from the implementation of the new labour codes. HCLTech said this led to a ₹956 crore impact at the EBIT level, or about 81 basis points, and a ₹719 crore hit to net income in Q3 FY26.

Management indicated that the ongoing impact is expected to be limited to 10-20 basis points going forward.

For FY26, HCLTech raised its revenue growth guidance to 4-4.5% year-on-year in constant-currency terms, from the earlier range of 3-5%. Services revenue guidance was also increased to 4.75-5.25% from 4-5% earlier.

The guidance upgrade was driven by strong execution in the December quarter and deal wins over the last few quarters.

The company maintained its full-year EBIT margin guidance of 17-18% for FY26, which excludes the one-time impact of the new labour codes but includes restructuring costs.

On artificial intelligence, HCLTech said advanced AI revenue stood at $146 million, accounting for about 3.8% of overall revenue and rising 19.9% quarter-on-quarter in constant-currency terms.

Management said that spending on traditional technology is slowing, while AI-led investments are increasingly driving future client spending.

Here's how brokerage reacted

Morgan Stanley maintained an 'Equalweight' rating on HCLTech and raised its price target to ₹1,760. The brokerage said the company delivered a positive surprise in Q3 and upgraded its full-year outlook.

It added that FY27 visibility appears marginally better than earlier, with an 18% margin likely emerging as the base level for the next year.

While Morgan Stanley expects consensus estimates to move higher, it cautioned that strong recent performance limits the scope for meaningful upside.

Macquarie reiterated its 'Outperform' rating on HCLTech with a price target of ₹2,080. The brokerage continues to view HCLTech as a growth leader among large-cap Indian IT services companies and expects EBIT margins to return to the 18-19% range in FY27.

Nomura maintained a 'Buy' rating on the stock and raised its price target to ₹1,810. The brokerage said HCLTech's asset-light approach and increased focus on services in a GenAI-driven environment positions the company well for future growth.

CLSA retained its 'Hold' rating on HCLTech with a price target of ₹1,661. The brokerage said that over the past six years, the stock has delivered an average return of -2% during the combined Q4 and Q1 period due to seasonality, while generating an average return of 21% during Q2 and Q3.

Kotak Institutional Equities, which has a 'Reduce' rating and a price target of ₹1,680, said it sees limited scope for meaningful EBIT margin expansion in a demand environment driven largely by cost take-outs.

Kotak expects an EPS CAGR of 7.0% over FY25-28E and said that HCLTech currently trades at around 23 times FY27E earnings, at a premium to peers and at valuations it considers fully priced.

Shares of HCLTech settled 0.34% higher on Monday at ₹1,667. The stock has risen 3% so far in 2026.