HCLTECH

Shares Slide on Weak Q4, Soft Guidance

’ shares fell over 10% on Wednesday after disappointing Q4FY26 results and modest FY27 guidance triggered analyst downgrades. The company’s forecast of 1–4% constant currency revenue growth raised doubts about its ability to sustain a valuation premium over peers TCS and Infosys. While HCL is pivoting aggressively toward AI-native opportunities, near-term headwinds in telecom, manufacturing, and retail, coupled with margin pressures, cloud investor sentiment. Financial Performance Q4FY26 constant-currency revenue: –3.3% QoQ (vs. consensus –1.6%). FY26 revenue growth: 3.9% (vs. 4.7% in FY25). EBIT margin: 17.2% (down from 18.3% in FY25). Deal wins (TCV): flat YoY at $9.3 billion. Management noted AI-driven deflation—typical $100 deals now closer to $80 as productivity improves. Guidance & Valuation FY27 revenue growth forecast: 1–4% CC, with services growth of 1.5–4.5%. Client-specific headwinds expected to shave ~50bps off growth. Valuations: trades at 17.8x FY27E earnings, vs. TCS at 16.2x and Infosys at 17.9x. Analysts caution that HCL’s growth premium over peers has eroded. Strategic Transition Walked away from >$1 billion of hyper-competitive traditional deals to focus on future-ready segments. AI-native revenue: $620 million in FY26 (~4% of total), growing ~30% annually. Secured second AI Factory deal worth >$100 million. Estimates 2–3% portfolio disruption from AI productivity gains (vs. industry 3–5%). West Asia war delayed software deal closures, adding to near-term softness.