HCL Tech down 2% after Q1FY26 — should you buy ahead of dividend payout on July 28?

HCL Technologies share price declined by 2.01 per cent to Rs 1,587.20 in early trade on Tuesday, following the release of its Q1FY26 earnings. The IT major reported strong revenue growth but weaker margins, prompting a mixed reaction from brokerages and cautious sentiment in the market.

HCL Technologies Q1FY26 Results: Revenue Up, Profit and EPS Down
In its Q1FY26 earnings report, HCL Tech posted consolidated revenue of Rs 30,349 crore, up from Rs 28,057 crore in Q1FY25, marking a year-on-year growth of 8.2 per cent.

However, net profit declined to Rs 3,844 crore, compared to Rs 4,259 crore a year ago. Earnings Per Share (EPS) also fell from Rs 15.70 to Rs 14.18, indicating margin pressures and higher investment costs. The company’s EBIT margin dropped to 16.3 per cent from 18 per cent in the previous quarter.

Brokerages React to HCL Tech Earnings: Mixed Ratings, Target Price Revisions

HCL Technologies' Q1 performance triggered a range of responses from global brokerages:

JP Morgan downgraded the stock to Neutral, cutting its target price to Rs 1,700 from Rs 1,800, citing concerns around AI-driven margin deflation.

Jefferies upgraded HCL Tech to Buy from Hold with a raised target price of Rs 1,850, citing strong revenue guidance and an expected 10% EPS CAGR between FY26–28.

Macquarie maintained an Outperform rating with a target of Rs 1,970, the highest among peers.

Citi, Goldman Sachs, and Morgan Stanley maintained Neutral or Equalweight stances, citing weak deal wins and lower EBIT margins.

HCL Dividend 2025: Interim and Special Dividend Announced

As part of its Q1FY26 update, HCL Tech announced an interim dividend and a special dividend, with a payment date set for 28 July 2025. This move highlights the company’s commitment to shareholder returns, even amid near-term earnings pressure.

Strong Long-Term Growth Despite Short-Term Margin Pressure

Despite the weak Q1 margin performance, HCL Technologies’ long-term financial growth remains robust:

Annual revenue has risen from Rs 75,379 crore in FY21 to Rs 117,055 crore in FY25. Net profit increased from Rs 11,169 crore to Rs 17,399 crore. EPS jumped from Rs 41.07 to Rs 64.16 over the same period. The company also has a history of rewarding investors through bonus shares, including the most recent 1:1 bonus issue in October 2019, with prior bonus announcements in 2015 and 2006.

HCL Tech Share Price Outlook

With the HCL Tech stock trading at Rs 1,587.20, investors are assessing the impact of near-term earnings pressure versus longer-term growth prospects. While the upward revision in revenue guidance is encouraging, margin risks and weak deal TCV could limit upside in the short term.

As a NIFTY 50 stock, HCL Technologies remains a key player in the Indian IT sector and is likely to stay in focus for both institutional and retail investors.