HCL Technologies Limited: Comprehensive Stock Analysis Report | Scrolls

by KarNivesh | 07 August, 2025

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HCL Technologies Limited

HCL Technologies is India’s third-largest IT services company, offering strong fundamentals and growth prospects despite near-term challenges. Trading at a P/E ratio of 23.4x lower than the industry average of 25.3x and delivering a solid dividend yield of 4.11%, HCL Tech remains a compelling long-term investment. The company holds a debt-free status, has ₹68,768 crores in cash reserves, and is making aggressive moves into AI and digital transformation.

Company Overview & Business Model: HCL Tech, headquartered in Noida, operates in over 60 countries. It focuses on three main segments: IT & Business Services (74% revenue), Engineering & R&D Services (17%), and HCL Software (9.3%). With over 227,000 employees and 150 innovation labs, the company serves clients across industries like finance, healthcare, manufacturing, and telecom.

Strategic Developments: HCL Tech has heavily invested in AI, partnering with OpenAI and launching platforms like AI Force and AI Foundry. It also formed partnerships with companies like Pearson to support AI-driven skill development. These initiatives aim to position the company strongly in the AI-driven future of enterprise IT.

Financial Performance: In FY25, HCL Tech reported ₹1,17,055 crores in revenue, up 6.39% YoY, with net profit at ₹17,399 crores. Q1 FY26 showed 8.2% YoY revenue growth but a 9.7% drop in profit due to AI-related investments. EBIT margins declined to 16.3% due to lower utilization, client defaults, and expansion costs.

Despite this, HCL Tech posted strong ROE (25%) and ROCE (31.6%), showcasing capital efficiency. The company’s balance sheet reflects stability, with ₹5,81,244 crores in equity and a current ratio of 2.07x, ensuring liquidity and operational resilience.

Valuation & Peers: Valuations remain attractive with EPS at ₹62.56 and a book value per share of ₹257. While smaller than TCS and Infosys in market cap, HCL Tech outpaced them in Q1 FY26 revenue growth. ROE and profit margins align competitively within the sector.

HCL Technologies vs Major IT Peers - Key Performance Metrics Comparison

Stock Performance & Technicals: The stock peaked at ₹2,012 in Jan 2025 and has since dropped to ₹1,463-1,471, underperforming year-to-date. However, long-term returns remain robust, with 3-year gains of 52.77% and 5-year returns of 107.58%. With a beta of 0.86, it offers lower volatility. Currently, the stock is trading near key support levels and may offer entry points for long-term investors.

HCL Technologies Stock Price Performance (August 2023 - August 2025)

Shareholding & Governance: Promoters hold 60.81%, led by the Nadar family, showing strong insider commitment. FIIs own 18.56%, mutual funds 8.44%, and domestic institutions 7.78%, reflecting balanced investor confidence.

Outlook & Risks: The IT sector is projected to grow, especially through AI adoption, cloud computing, and digital services. HCL Tech's investments align with these trends. FY26 revenue guidance is 3-5% growth with 17-18% EBIT margins.

Key risks include margin pressures from AI investments, high client concentration in the U.S., talent attrition (13%), and global macro uncertainties. Despite these, the company's strategic positioning and fundamentals support long-term growth.

HCL Tech offers a blend of stability and future readiness. Investors with a 3+ year horizon could benefit from its digital pivot and AI investments, making it a strong candidate for diversified portfolios.