HCLTech posts strong Q2 results; IDBI Capital flags 13% upside potential

HCLTech posted solid second-quarter results that have prompted IDBI Capital to identify a 13% upside opportunity in the stock. The IT services company reported revenue of $3,724 million in the quarter, representing sequential growth of 2.3% and year-on-year expansion of 2.6% in constant currency terms.

Services revenue, the key metric for IT service providers, expanded 3% quarter-on-quarter and 4% year-on-year, signalling steady demand across client segments. The brokerage highlighted that the quarter ranked among HCLTech's cleanest performances in the recent period, with the company demonstrating improved operational execution and revenue stability.

An increasingly prominent factor in the positive assessment is HCLTech's ability to shift its service mix towards higher-margin offerings powered by artificial intelligence and advanced technologies. This transition is expected to support margin expansion going forward, a key driver of profitability growth for IT services firms.

IDBI Capital's 13% upside estimate suggests the market may not have fully priced in the benefits from HCLTech's strategic pivot toward AI-driven services and the associated margin benefits. The analyst view reflects growing confidence in the company's ability to navigate the evolving IT services landscape while maintaining stable revenue growth.