HCL Tech vs TCS: Which IT stock to buy today after Q1 results 2025? EXPLAINED

By Admin

15 Jul, 2025

As India's IT giants release their Q1FY26 results, the spotlight intensifies on two major players   Tata Consultancy Services (TCS) and HCL Technologies. With investor attention sharply focused on performance metrics, margins, and forward outlooks, the question dominating Dalal Street today is: Which IT stock is the better buy – TCS or HCL Tech?

Market Mood Post Q1FY26

The April-June 2025 quarter results are in, and both companies have delivered notable updates. However, analysts are leaning more favorably toward TCS, highlighting its stronger margin profile and better financial resilience, despite HCL Tech’s higher revenue growth. Investors are weighing the near-term headwinds against long-term strategies to determine where to place their bets.

Q1FY26: A Snapshot

HCL Technologies

• Net Profit: ₹4,257 crore (Down 9.7% YoY)
  
  

• Revenue: ₹30,349 crore (Up 8.1% YoY)
  
  

• Operating Margin: 16.3% (Below expectations)
  
  

• Key Concerns: Margin decline, lower utilisation, client bankruptcy impact
  
  

• Stock Reaction: Down 1.04%, closing at ₹1,619.95 (BSE)
  
  

HCL Tech delivered strong top-line growth, outpacing TCS in revenue. However, this was overshadowed by shrinking margins and a steep drop in net profit. Analysts cite rising costs, delays in deal ramp-ups, and investments in AI and GTM (Go-To-Market) strategies as contributors to the margin pressure.

Tata Consultancy Services (TCS)

• Net Profit: ₹12,760 crore (Up 6% YoY)
  
  

• Revenue: ₹63,437 crore (Up 1.3% YoY, down 3% in constant currency)
  
  

• Operating Margin: 24.5% (Up 0.30% QoQ)
  
  

• Key Strengths: Stable profit, improved margins, strong deal pipeline
  
  

Despite muted revenue growth, TCS impressed the street with robust profit figures and stable margins. The company continues to lead the pack with its industry-best cash conversion and a $9.4 billion order book, up 13% YoY. Strategic bets on AI and digital transformation further add to its long-term promise.

Expert Opinions

• Mohit Gulati (ITI Growth Opportunities Fund): “TCS clearly emerges as the more compelling IT bet backed by a superior margin profile and steady profit trajectory.”
  
  

• Vinit Bolinjkar (Ventura Securities): TCS is better positioned with margin stability and incoming orders (like BSNL) expected to lift the next quarter.
  
  

• Bhavik Joshi (INVasset PMS): “TCS offers margin leadership and stability; HCL Tech brings growth potential but at higher volatility due to aggressive AI investments and short-term profitability concerns.”
  
  

Conclusion: Which Stock to Buy?

Buy TCS if you prefer:

• Margin leadership and strong profitability
  
  

• Stability in earnings
  
  

• Long-term strategic clarity in AI and digital
  
  

• Strong deal pipeline and consistent cash flows
  
  

Buy HCL Tech if you believe in:

• High growth potential from digital/cloud segments
  
  

• Willingness to take short-term risks for long-term AI gains
  
  

• Ability to rebound after margin pressures ease
  
  

Final Verdict

TCS stands out as the safer, margin-driven investment   ideal for risk-averse investors seeking predictability and resilience. On the other hand, HCL Tech offers a higher risk-reward dynamic, appealing to those with a higher risk appetite betting on the future of AI and digital transformation.

As the IT sector continues to evolve, both companies remain stalwarts of India’s tech strength   but today, the scales tilt slightly in favor of TCS.