IT stocks came under heavy selling pressure on Wednesday, dragging the Nifty IT index down more than 5 per cent to an intraday low of 30,135.15, as a string of weaker‑than‑expected Q4FY26 earnings and cautious outlooks from sector heavyweights dampened sentiment.
The selloff was broad‑based, but HCL Technologies emerged as the worst performer, tumbling sharply after its quarterly results and FY27 guidance disappointed the Street on multiple fronts.
HCL Technologies down 10%
HCL Technologies’ share price fell 10 per cent on Wednesday the sharp decline followed a Q4FY26 performance that missed expectations across key parameters, triggering a wave of target price cuts by brokerages. The stock reacted negatively to a combination of weak revenue performance, margin compression and subdued deal momentum.
A major concern was the sharp fall in net new deal wins, which came in at just USD 1.9 billion, marking a 35 per cent year‑on‑year decline. The weak deal flow raised questions around growth visibility, particularly in Europe, where demand appears to be softening.
Profitability also disappointed. The company reported an EBIT margin of 16.5 per cent, well below the Street’s expectation of around 17.6 per cent, indicating pressure from lower utilisation, restructuring costs and a challenging pricing environment.
On the revenue front, Q4FY26 dollar revenue declined 3.3 per cent quarter‑on‑quarter to USD 3,682 million, missing the company’s earlier guidance of 4–4.5 per cent growth. Management also flagged AI‑led deflation of 2–3 per cent, adding to near‑term uncertainty.
The disappointment deepened with the company’s FY27 guidance, which pointed to a marked slowdown compared with FY26. HCL Technologies expects company revenue growth of 1–4 per cent YoY in constant currency, sharply lower than the 4–4.5 per cent guidance for FY26. Services revenue growth is seen at 1.5–4.5 per cent, down from 4.75–5.25 per cent earlier, even as EBIT margin guidance was raised marginally to 17.5–18.5 per cent.
The mix of slower growth, pricing pressure and weaker demand led several brokerages to slash earnings estimates and cut target prices, accelerating the stock’s decline.
How TCS and Wipro stack up
On a quarter‑on‑quarter basis, Tata Consultancy Services reported 1.2 per cent constant currency growth, well ahead of Wipro’s 0.2 per cent and HCL Tech’s -3.3 per cent. TCS also maintained profitability, with an EBIT margin of 25.3 per cent, compared with 17.3 per cent at Wipro and 16.54 per cent at HCL Technologies.
In terms of deal momentum TCS reported total contract value (TCV) of USD 12 billion, significantly higher than Wipro’s USD 3.5 billion and HCL Tech’s USD 1.936 billion. While TCS comfortably met its guidance, Wipro barely did so, and HCL fell short.
In terms of revenue performance, HCL Technologies lagged peers across metrics. Rupee revenue grew just 0.3 per cent QoQ, compared with 5.4 per cent for TCS and 2.7 per cent for Wipro, while dollar revenue declined 3.3 per cent QoQ, against modest growth at its peers.
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