ICICI Securities has maintained its Hold rating on HCL Technologies with a target price of ₹1,590, following the company's strong quarterly performance that exceeded revenue expectations.

Strong Revenue Performance Beats Estimates

HCL Technologies delivered impressive revenue growth of 4.2% quarter-on-quarter in constant currency terms, significantly outperforming analyst expectations. The performance surpassed ICICI Securities' estimate of 2.2% and consensus estimate of 2.8%, demonstrating the company's resilient business momentum.

The strong revenue performance was primarily driven by robust growth in the software products business, which benefited from seasonal strength. Additionally, the company maintained healthy traction in its engineering research and development (ER&D) and IT services segments, despite facing seasonal headwinds from furloughs.

Robust Deal Momentum and Contract Wins

HCL Technologies reported exceptional deal performance with total contract value (TCV) reaching $3.00 billion, marking significant growth across multiple timeframes. The company achieved its highest-ever annual contract value (ACV) component, indicating strong client commitment and long-term business visibility.

The trailing twelve months TCV growth of 21% year-on-year positions HCL Technologies favorably to potentially report the highest growth among large-cap peers in FY27.

Market Dynamics and Emerging Opportunities

Management highlighted that traditional discretionary spending has experienced a slowdown in the current market environment. However, new opportunities are emerging in specialized areas, particularly in managing AI infrastructure and AI engineering services, which could drive future growth prospects.

Valuation and Investment Outlook

ICICI Securities maintains its Hold recommendation with a target price of ₹1,590, applying differentiated valuation multiples across business segments:

The brokerage's cautious stance reflects the mixed market dynamics, balancing the company's strong operational performance against broader industry challenges in discretionary spending.

HCL Technologies has received a 'Hold' rating from ICICI Securities following its impressive quarterly revenue performance that surpassed market expectations. The IT services giant demonstrated strong operational momentum with significant growth across key business segments.

Strong Revenue Performance Beats Estimates

The company's latest quarterly results showcased robust financial performance with notable growth metrics:

The 4.2% quarter-on-quarter constant currency growth represents a substantial beat against both ICICI Securities' estimate of 2.2% and the broader market consensus of 2.8%. This performance indicates strong underlying business momentum and effective execution of the company's strategic initiatives.

Key Growth Drivers Fuel Performance

Several factors contributed to HCLTech's strong quarterly showing, demonstrating the company's diversified revenue streams and operational resilience:

• Software Products Segment: Delivered exceptional performance, serving as a primary growth driver for the quarter
• Seasonal Strength: Benefited from typical seasonal uptick in business activity
• ER&D Services: Maintained healthy traction despite market challenges
• IT Services Division: Showed robust performance across client engagements

Navigating Market Headwinds

Despite the strong overall performance, HCLTech faced certain operational challenges during the quarter. The company experienced furlough-related headwinds that impacted some business segments. However, the strong performance in software products and healthy traction in ER&D and IT services more than offset these temporary challenges.

ICICI Securities Maintains Hold Rating

Following the comprehensive analysis of HCLTech's quarterly performance, ICICI Securities has maintained its 'Hold' rating on the stock. The brokerage firm's assessment takes into account the company's revenue beat, strong segment performance, and ability to navigate market challenges while delivering consistent growth across its diversified business portfolio.