HCL Tech stock falls 1.5%, leads Nifty losers; Citi bearish, flags rich valuation despite AI progress

As per the latest business developments, HCL Technologies shares declined on Thursday after Citi retained its ‘sell’ rating on the IT services major, citing its valuation premium to large-cap peers even as the brokerage acknowledged progress in artificial intelligence (AI) and opportunities in the data-centre business.

The HCL Tech stock was down 1.5 percent at Rs 1,211 in morning trade, making it the top loser on both the Nifty 50 and Nifty IT indices. The stock has fallen around 26 percent so far in 2026, compared with a 10.3 percent slide in the Nifty 50.

Citi maintained its ‘sell’ call on HCL Tech with a target price of Rs 1,110 per share, implying downside of around 10 percent from Wednesday’s closing price. At the prevailing price, HCL Technologies had a market capitalisation of just under Rs 3.29 lakh crore. It has an adjusted P/E multiple of 18.4x, according to NSE data.

The brokerage stated the demand environment for HCL Tech remained largely unchanged, with the business seeing the usual seasonal trends. While advanced AI represents a new total addressable market (TAM) and HCL Tech is making good progress in the segment, Citi stays wary on the stock because its valuation premium to large-cap IT peers persists.

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Within engineering services, the automotive and telecom verticals have been under pressure, although Citi anticipates the business to stabilise. The software segment, in the meantime, has been affected by macroeconomic softness, portfolio declines and a shift towards term licences.

Citi was more constructive on HCL Tech’s data-centre opportunity, saying the firm could capture a larger share of value as a full-stack player.

The softness in HCL Tech came amid a largely flat broader market. At 10:30 am, the Sensex was down around 20 points at 74,744.68, while the Nifty 50 was nearly unchanged at 23,427.30. The Nifty IT index was down 0.18 percent.

HCL Tech expands semiconductor capabilities

Separately, HCL Tech on September 8 announced the launch of an Advanced Semiconductor Lab in Bengaluru with an investment of Rs 185 crore, expanding its capabilities in semiconductor testing and engineering. The 40,000-square-foot facility includes 25,000 square feet of Class 10K and Class 1K cleanrooms and will provide end-to-end post-silicon engineering, advanced testing and failure-analysis services.

The firm stated the facility will backing research and development, pre-production and production qualification, with the aim of enabling faster turnaround, improving quality and reducing complexity for global customers.