Synopsis:
TCS shares gained over 1% while HCL Tech slipped more than 4% after releasing their Q1 FY26 results. TCS appeared stronger with positive investor sentiment, while HCL Tech faced selling pressure amid profit declines.
Following the release of Q1FY26 results for the April–June quarter, India’s top IT companies are back in the spotlight. As investors assess the numbers and outlooks of sector heavyweights like TCS and HCL Tech, the market is abuzz with speculation over which stock presents a better opportunity in today’s trading session.
1. HCL Tech
With a market capitalization of Rs 4,25,326 Crores, the share price of HCL Tech plunged over 4% on Tuesday to hit an intraday low of Rs 1550.50 per share from the previous day’s closing price of Rs 1619.95 per share.
Q1 FY26 Update
HCL Technologies reported a revenue of Rs 30,349 crore in Q1 FY26, marking an 8.2% year-on-year (YoY) increase from Rs 28,057 crore in Q1 FY25. On a sequential basis, the growth was marginal at 0.3%, up from Rs 30,246 crore in Q4 FY25.
However, the company saw a sharp decline in profitability. Net profit for the April–June quarter stood at Rs 3,844 crore, down 9.7% YoY from Rs 4,259 crore and 10.8% lower than Rs 4,309 crore in the previous quarter.
Earnings per share (EPS) also reflected this pressure, coming in at Rs 14.18 in Q1 FY26 down 9.7% from Rs 15.70 in Q1 FY25 and 10.7% from Rs 15.90 in Q4 FY25. Global brokerage Jefferies issued a contrarian upgrade on HCL Tech with a target price of Rs 1,850 implying a potential upside of nearly 19% from the current market price of Rs 1,560.
Jefferies upgraded HCL Tech to Buy, citing its strong FY26 growth guidance of 3–5% and an expected 10% EPS CAGR over FY26–28 the highest among top five Indian IT firms. The brokerage sees HCL’s superior growth outlook, healthy free cash flow, and higher payouts as key drivers for valuation re-rating versus peers like TCS and Infosys.
About the Company
HCL Technologies is one of the top five Indian IT services companies by revenue, offering an integrated portfolio that includes IT solutions, infrastructure management, engineering and R&D, and BPO services. Since its IPO in 1999, HCLTech has expanded globally, leveraging a strong offshore infrastructure and presence in 46 countries.
The company serves over 10,000 clients through 210+ delivery centers and 60+ innovation labs, powered by a workforce of 223,000+ professionals across 60 countries. It also holds over 2,000 patents and is recognized as a top employer in 17 countries.
For FY26, HCLTech has guided for 2.0%–5.0% year-on-year revenue growth in constant currency, both overall and for its services segment. The company expects EBIT margins to range between 18.0% and 19.0%. Additionally, HCL continues to make a positive social impact, having touched 5.13 million lives through its CSR arm, the HCL Foundation.
2. Tata Consultancy Services
With a market capitalization of Rs 11,74,413 Crores, the share price of TCS rose over 1% on Tuesday to hit an intraday high of Rs 3259.80 per share from the previous day’s closing price of Rs 3223.20 per share.
Q1 FY26 Update
Tata Consultancy Services (TCS) reported a revenue of Rs 63,437 crore in Q1 FY26, registering a 1.3% year-on-year (YoY) growth from Rs 62,613 crore in Q1 FY25. On a quarterly basis, however, revenue declined by 1.6% from Rs 64,479 crore in Q4 FY25.
The company’s net profit for the quarter stood at Rs 12,819 crore, up 5.9% YoY from Rs 12,105 crore. Sequentially, profit rose by 4.3% from Rs 12,293 crore in the previous quarter, reflecting improved operational efficiency.
Earnings per share (EPS) for Q1 FY26 came in at Rs 35.27, marking a 6% rise from Rs 33.28 in Q1 FY25 and a 4.4% increase from Rs 33.79 in Q4 FY25. Motilal Oswal has reiterated a BUY rating on TCS with a target price of Rs 3,850, indicating a potential upside of around 18% from the current market price of Rs 3,252.
Motilal Oswal reiterated a ‘Buy’ rating on TCS, highlighting that while growth remains soft, the BSNL ramp-down is now manageable. The brokerage believes TCS can drive margin gains through better cost control and improved utilisation.
Despite a weak Q1, segments like Hi-Tech and Manufacturing showed resilience. Over FY25–27, it expects a 3% USD revenue CAGR and 6.6% INR EPS CAGR, supported by operational efficiencies.
About the Company
Tata Consultancy Services (TCS), part of the Tata Group, is a global IT services and consulting leader with over 607,000 employees across 55 countries. Founded in 1968, TCS offers a cognitive-powered, consulting-led portfolio of business, technology, and engineering services, generating USD 30 billion in revenue in FY25.
Conclusion
Based on Q1 FY26 performance and current market conditions, TCS appears to be the stronger buy for today. It offers better profit growth, and near-term visibility, making it a safer choice in a volatile environment. HCL Tech, while showing solid revenue growth, faces near-term profitability pressures and may suit long-term, risk-tolerant investors.
Written By: Rohan Pandey
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