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The market expects much less from HCL Technologies than it has delivered before.
At today’s share price, buyers are assuming HCL Technologies grows about 0% a year, forever. Over the last ten years it actually grew about 10% a year. That is a big step down from its own record — in other words, that it stops growing altogether. Either the market can see a problem that the published accounts do not show yet, or it is expecting a slowdown that has not happened.
- How it is valued: Discounted cash flow.
- What the price assumes: 0% growth, against 10% the model takes from its own record.
- Ten-year record: Between FY2018 and FY2026, HCL Technologies' revenue went from ₹50,569 crore to ₹1,30,144 crore — it compounded at about 13% a year over 8 years.
- Biggest swing factor: Services growth. Main risk: Client budget cuts.
01Services, engineering — and software
HCL Technologies, founded by Shiv Nadar, is India's third-largest IT services company. Most of its revenue comes from IT and business services and from engineering and R&D services, which design products and software for manufacturers, telecom companies and technology firms.
Since 2019 it has also built HCLSoftware, largely by buying enterprise software products from IBM. Software earns licence and support revenue at higher margins than services, but with lumpier growth.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the growth that price implies for HCL Technologies, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03HCL Technologies' record, in plain numbers
Between FY2018 and FY2026, HCL Technologies' revenue went from ₹50,569 crore to ₹1,30,144 crore — it compounded at about 13% a year over 8 years. Net profit grew from ₹8,722 crore to ₹16,652 crore, about 8% a year — slower than revenue, so margins narrowed. In FY2026 it kept 12.8% of revenue as net profit — its weakest year in the period. The latest year added 11.2% to revenue, close to its own long-run pace. FY2019 is missing from the filed series used here, so that year is left out rather than estimated.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2018 | 50,569 | 8,722 | 17.2% |
| FY2020 | 70,676 | 11,057 | 15.6% |
| FY2021 | 75,379 | 11,169 | 14.8% |
| FY2022 | 85,651 | 13,523 | 15.8% |
| FY2023 | 1,01,456 | 14,845 | 14.6% |
| FY2024 | 1,09,913 | 15,710 | 14.3% |
| FY2025 | 1,17,055 | 17,399 | 14.9% |
| FY2026 | 1,30,144 | 16,652 | 12.8% |
04How HCL Technologies gets valued — and why
Discounted cash flowThis business is valued on the cash it is expected to generate, discounted back at its cost of capital — with growth taken from its own ten-year record rather than from guidance.
05What decides HCL Technologies' value
Services growth
IT and business services are most of the revenue; their growth sets the base case.
Engineering and R&D
HCLTech is one of the strongest Indian firms in engineering services, which follows clients' product-development budgets.
Software renewals
Recurring support and subscription revenue from older software products has to be kept as clients modernise.
Payout
HCLTech returns a large share of its profit as dividends, so value to shareholders follows cash generation closely.
06What could go wrong
- Client budget cuts. Discretionary IT and engineering projects are cut first when clients tighten budgets.
- Ageing software. Some acquired products serve mature markets where revenue can shrink.
- Currency. A stronger rupee lowers reported revenue and margins.
07What the full HCLTech valuation shows
Sign in free to see the complete HCL Technologies valuation
- ✓Fair value per share — from a ten-year discounted cash flow, every step shown
- ✓The Workbench — change revenue growth, the discount rate or terminal growth and watch HCLTech's value move
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against TCS, Infosys and Wipro on the same cash-flow model
- ✓Downloadable report — the full write-up, yours to keep
08Compare HCL Technologies with peers
The same valuation, run side by side.
HCL Technologies vs Tata Consultancy ServicesBoth large-cap IT services, on the same cash-flow model.→HCL Technologies vs InfosysComparable scale, a different services mix.→HCL Technologies vs WiproThe nearest peer on size and margin profile.→09Questions people ask about HCL Technologies
How is HCLTech different from TCS and Infosys?
It has a much larger engineering and R&D services business and a software products arm, HCLSoftware, which neither of the other two has at scale.
Why does HCLTech own software products?
To add higher-margin, recurring licence and support revenue alongside services. The trade-off is that some acquired products sit in mature, slow-growing markets.
HCLTech or TCS — which is better value?
Both are valued on the same cash-flow model; the comparison page sets them side by side on price, returns and what each share price assumes.
Is HCL Technologies overvalued?
At ₹1,378 the market is pricing in roughly 0% sustained growth, against the ~10% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of HCL Technologies?
It is computed from the filed financial statements using the method that fits this business (discounted cash flow), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does HCL Technologies carry?
Debt to equity stands at 0.00, against 0.00 at the start of the period — the balance sheet is a core input to the cost of capital used here.