On Friday, BofA Securities increased the price target on HCL Technologies (HCLT:IN) shares from INR1,600.00 to INR1,750.00, maintaining a Neutral rating on the stock.
The adjustment reflects the company's proactive strategy in adopting GenAI-led delivery transformation and offering full-stack AI solutions to its customers.
HCL Technologies is focusing on leveraging artificial intelligence to enhance legacy modernization, build data services such as data pipelines, and develop industry-specific AI applications.
The company's approach is designed to not only improve its profitability by retaining a portion of the efficiency gains but also to compensate for any potential deflation in its traditional services. The exact impact of such deflation on the company's finances, however, remains uncertain.
The CEO of HCL Technologies has indicated that, unlike the initial phase of the cloud era where smaller specialists saw greater benefits, more significant vendors might have the upper hand in the emerging GenAI era. This advantage is expected to stem from their superior automation capabilities and in-depth process knowledge.
BofA Securities has based the new price target on a 26 times multiple of HCL's estimated earnings per share for the financial year 2026, an increase from the previous 24 times multiple. The firm's analyst cites the company's improved medium-term growth prospects as the reason for this uplift in valuation.
HCL Technologies' strategy to integrate AI into its service offerings is aimed at staying ahead in a rapidly evolving technological landscape. The company's focus on GenAI and AI-driven solutions is a response to the shifting demands in the IT services industry.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.