Mumbai, April 22 : Shares of HCL Technologies tumbled sharply on Wednesday, falling more than 10 per cent to Rs 1,289 on the NSE, as investor sentiment turned negative following a disappointing quarterly performance and subdued growth outlook.

The steep decline came after several brokerages downgraded the stock and cut their target prices, citing concerns over weak revenue growth, margin pressures and cautious forward guidance.

The companyâ??s earnings report highlighted multiple areas of concern. Alongside its fourth-quarter results, HCL Technologies projected FY27 revenue growth of just 1â??4 per cent year-on-year in constant currency terms.

This guidance comes on the back of a miss in its FY26 outlook, where the company delivered 3.9 per cent growth against its earlier guidance of 4â??4.5 per cent.

The services segment outlook also remained underwhelming, with expected growth of 1.5â??4.5 per cent, lower than the 4.8 per cent recorded in FY26.

The earnings disappointment triggered a significant erosion in shareholder wealth, with the companyâ??s market capitalisation declining by approximately Rs 38,000 crore to around Rs 3.53 lakh crore.

For the March quarter, revenue stood at $3.7 billion, marking a 3.3 per cent sequential decline in constant currency and falling short of market expectations.

Management attributed the weak performance to several factors, including reduced discretionary IT spending by two major US telecom clients, cancellation of two SAP-related projects, and client-specific challenges in the retail and manufacturing sectors. These issues are expected to weigh on FY27 services growth by about 50 basis points. Additionally, the company flagged a softer demand outlook in Europe due to geopolitical uncertainties and estimated a 200â??300 basis point deflationary impact from artificial intelligence on traditional IT services.

Brokerages responded with caution. Jefferies adopted the most bearish stance, downgrading the stock to â??Underperformâ?? and cutting its target price to Rs 1,165.

The brokerage expects FY27 organic revenue growth of 2.4 per cent, which would be the weakest since FY23, and reduced its valuation multiple amid concerns over slowing growth. It also noted that the stock trades at a premium to peers despite similar growth prospects.

Other firms echoed similar concerns. Citi maintained a â??Neutralâ?? rating but lowered its target price to Rs 1,385, citing weak revenue performance, subdued deal wins and sluggish forward indicators such as modest growth in deal bookings and headcount.

/IANS