HomeMarket NewsMacquarie upgrades HCLTech, raises target price by 6%
Macquarie’s analysis suggests that while FY25 margins might remain subdued, the higher utilisation of these lower-cost employees will lead to margin expansion in FY26 and FY27.
Macquarie has recently upgraded its rating on HCL Technologies, classifying it as an “outperform” and marking it as a marquee buy. They have raised the target price for HCLTech by 6%, citing improved margin expectations for FY26 and FY27 as the key reason behind this optimistic forecast.
Over the past few years, from FY20 to FY24, HCLTech’s margins have faced pressure due to a rapid expansion in its workforce. This expansion, while essential for the company’s growth, temporarily increased costs, impacting profit margins. However, Macquarie highlights a significant shift in HCLTech’s hiring strategy that could drive future profitability.
The increased hiring of freshers has been a pivotal move for HCLTech. Freshers, being at the lower end of the pay scale, reduce the overall employee cost. As these employees gain experience and the company’s revenue expands, the cost efficiency is expected to improve.
Macquarie’s analysis suggests that while FY25 margins might remain subdued, the higher utilisation of these lower-cost employees will lead to margin expansion in FY26 and FY27.
Moreover, Macquarie emphasises HCLTech’s sustained growth leadership among Indian tier-1 IT companies from FY25 to FY27.
HCLTech shares are up by 0.85% on Thursday, closing at ₹1,456 each.
(Edited by : Ajay Vaishnav)
