HCL: Intact FY27 outlook; doubles down on SLM approach to AI

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HCL: Intact FY27 outlook; doubles down on SLM approach to AI

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HCL

Intact FY27 outlook; doubles down on SLM

approach to AI

Reiterate Rating: NEUTRAL | PO: 1,290 INR | Price: 1,221 INR

Small beat in Q1 keep up visibility to mid-point of guide 13 July 2026

Q1 revenue growth of 2.6%yoy (cc) was a beat of 80bp to our estimate on account of Equity

deal ramp-led strong growth in retail/CPG and some of the known client headwinds

more likely to materialize later in the fiscal. Read together with deal wins in the quarter

Key Changes

which were higher than typical for Q1, the known impacts yet to materialize and the

recent mega deal win of July expected to contribute to revenue predominantly from (Rs) Previous Current

FY28, we think visibility is best for mid-point of the FY27 revenue guide (1%-4%yoy). Price Obj. 1,440.00 1,290.00

With Jaspersoft acquisition closed last week and the other one expected to close by end 2027E EPS 71.05 72.31

Q2, we bake in an additional 1% of M&A contribution for the year. EBIT margin of 16.9% 2028E EPS 75.32 76.01

was slightly below our estimate of 17.2% on higher-than-expected restructuring costs. 2029E EPS 79.15 79.87

Also baking in upcoming M&A, we retain our EBIT margin estimate of 17.8% for FY27. 2027E EBITDA (m) 293,254.2 298,641.6

2028E EBITDA (m) 310,656.8 316,683.4

Doubles down on SLM approach to AI 2029E EBITDA (m) 326,446.7 332,779.7

Post the recent investment in Sarvam (see report) Looking at strategic aspects of the

investment into Sarvam AI), company also announced plans to invest into building out a

full stack data center with an initial investment outlay of INR35bn (mix of debt and Kunal Tayal >>

equity and potentially including partners). We view this as a plan to double down on the Research Analyst BofAS India