HCL Technologies has delivered strong third-quarter results for FY26, surpassing analyst expectations across key financial metrics. The IT services major reported robust performance with improved margins and significant growth in new deal acquisitions, prompting Motilal Oswal to maintain its positive outlook on the stock.

Strong Q3FY26 Financial Performance

The company's quarterly results demonstrated solid execution across multiple parameters:

The revenue growth of 4.20% quarter-on-quarter in constant currency terms significantly exceeded analyst estimates of 2.30%, highlighting the company's strong demand environment and execution capabilities.

Revised FY26 Guidance and Nine-Month Performance

HCL Technologies has updated its full-year guidance, reflecting increased confidence in its business trajectory:

For the nine-month period of FY26, the company reported revenue growth of 10.80% and EBIT growth of 5.00%, while adjusted PAT declined 1.60% year-on-year in Indian Rupee terms.

Analyst Outlook and Projections

Motilal Oswal expects continued strong performance in the fourth quarter, projecting revenue, EBIT, and adjusted PAT to grow 12.30%, 7.40%, and 9.00% year-on-year respectively in Q4FY26. The brokerage firm highlighted HCL Technologies' position as the fastest-growing large-cap company in the sector.

The research house praised the company's all-weather portfolio, which continues to demonstrate resilience and outperformance despite uncertain demand conditions in the global IT services market.

Investment Recommendation

Motilal Oswal has reiterated its BUY rating on HCL Technologies with a target price of ₹2,200, indicating a potential upside of 32.00% from current levels. The recommendation is based on the company's consistent growth trajectory, margin expansion capabilities, and strong deal pipeline as evidenced by the significant increase in Total Contract Value.

Prabhudas Lilladher has issued a buy recommendation for HCL Technologies with a target price of ₹1,910, following the company's impressive third-quarter performance that exceeded analyst expectations across multiple business segments.

Strong Revenue Performance Beats Estimates

The company delivered robust revenue growth of 4.2% quarter-on-quarter in constant currency terms, significantly outperforming Prabhudas Lilladher's estimate of 3.0% QoQ growth. This strong performance was primarily driven by exceptional seasonality in the HCLSoftware segment, which recorded remarkable growth of 28.1% QoQ in constant currency terms.

Services Business Demonstrates Resilience

The services business showed remarkable resilience with 1.8% QoQ constant currency growth, effectively countering the typical impact of furloughs and holidays during the quarter. The ER&D segment emerged as a key growth driver, reporting another quarter of strong performance with 3.1% QoQ constant currency growth, compared to 2.2% QoQ growth in the previous quarter.

The growth momentum was largely supported by accounts outside the top 20, which grew by 2.3% QoQ, indicating strong decision-making and execution capabilities at the lower end of the client pyramid. Additionally, advanced AI revenue demonstrated impressive growth of 19.9% QoQ in constant currency terms, primarily comprising short-burst deals that validate the strong velocity of smaller transactions.

Significant Deal Wins and Order Book

HCL Technologies reported new deal Total Contract Value (TCV) of USD 3.00 billion for the quarter, which includes one mega deal worth USD 473.00 million representing a five-year strategic engagement. This substantial order book provides visibility for future revenue streams and reinforces the company's competitive positioning in the market.

Revised Growth Projections and Outlook

Based on the strong Q3 performance, Prabhudas Lilladher has revised its topline constant currency growth projections upward by 30 basis points for FY27E to 7.0% and by 20 basis points for FY28E to 7.7%. The brokerage expects service-led growth to continue its momentum in FY27 and FY28, supported by strong order wins and the growing AI revenue stream.

However, the research firm anticipates some margin normalization in Q4, with additional pressure from new labour codes expected to keep margins in check despite the margin beat achieved in Q3.

Valuation and Investment Recommendation

The stock is currently trading at 22x FY27E earnings per share and 19x FY28E earnings per share. Prabhudas Lilladher has assigned a 22x multiple to FY28 EPS to arrive at the target price of ₹1,910, reflecting confidence in the company's growth trajectory and market positioning in the technology services sector.