TCS vs HCL Tech vs Wipro: Which IT stock offers a better opportunity now?

Mint

4 days ago

After the announcement of the financial results for the April-June quarter of the fiscal year 2025-26 (Q1FY26), major Indian information technology (IT) firms have gained significant attention in the latest market sessions. As investors on D-Street weigh their options for buying, selling, or holding IT stocks at this moment, market analysts favour Tata Consultancy Services (TCS), followed by HCL Technologies Ltd (HCL Tech), with Wipro coming in third after their latest Q1FY26 earnings report.
Wipro announced on Thursday, July 17, a 9.8% increase in its consolidated profit after tax, reaching ₹ 3,336.5 crore for the June quarter. This is an increase from a profit after tax of ₹ 3,036.6 crore reported in the same quarter last year, as stated in the company's regulatory filing. The consolidated revenue from operations for Wipro rose slightly to ₹ 22,134.6 crore during the April-June period, compared to ₹ 21,963.8 crore in the corresponding period of the previous year.
HCL Technologies revealed on Monday, July 14, a 9.7% drop in its consolidated net profit for the June quarter, affected by rising expenses and the one-off impact of a client's insolvency. The company disclosed a net profit (attributable to the company's owners) of ₹ 4,257 crore during the same quarter last year, according to a regulatory announcement. In the reviewed quarter, revenue from operations grew by 8.1%, amounting to ₹ 30,349 crore, compared to ₹ 28,057 crore in Q1FY25.
The firm reported an operating margin of 16.3%, which did not meet their expectations. While Q1 has generally been their weakest quarter, the lower-than-expected operating margin was mainly due to a decline in utilization resulting from delays in the ramp-up of a specific program.
On Thursday, July 10, TCS reported a 6% growth in its net profit for the June quarter, totaling ₹ 12,760 crore. A year earlier, the Tata group company had posted a net profit of ₹ 12,040 crore. The firm's revenue increased by 1.3%, reaching ₹ 63,437 crore, compared to ₹ 62,613 crore for the same quarter last year, though it saw a 3% decline when assessed on a constant currency basis. A company statement noted that its operating profit margin rose by 0.30 percent sequentially, now at 24.5% for the April-June timeframe.
According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, TCS, HCL Tech, and Wipro present distinct risk-reward profiles based on their Q1 FY26 performance and strategic posture.
Srivastava believes TCS remains the most stable among the three, with strong operating (24.5%) and net margins (20.1%), and nearly perfect operating cash conversion (100.3%). Its robust Q1 TCV of $9.4 billion, focus on AI, and steady growth in BFSI and tech services indicate enduring client trust and adaptability. Despite muted YoY revenue growth (1.3%), TCS's margin resilience and high RoCE make it a safe, large-cap investment ideal for conservative investors seeking steady compounding and dividend payouts.
Talking about HCL Tech said that while showing healthy revenue growth (8.2% YoY), saw a sharp EBIT margin contraction to 16.3% (from 19.4% in Q4 FY25), primarily due to wage hikes and AI investments. However, its free cash flow at 121% of net income and strong deal wins ($1.812B) suggest the margin dip may be transitory. HCL Tech also benefits from robust traction in telecom/media and Americas. Investors with a medium-risk appetite may find it appealing due to its strong fundamentals and growth initiatives in engineering/R&D and GenAI.
Seema explained that Wipro, though improving in bookings ($2.666B, up 131% YoY), remains a laggard in revenue growth (0.8% YoY) and showed QoQ revenue/margin decline. Yet, its focus on GenAI and operational efficiency led to a 10% YoY profit growth. With a 15% net margin and strong cash flow (123% of net profit), Wipro might offer turnaround potential, suitable for value-oriented investors willing to bet on a cyclical upturn. Overall, TCS stands out for stability, HCL Tech for balanced growth, and Wipro for potential upside with higher risk.
Anshul Jain, Head of Research at Lakshmishree Investment said that the Indian IT space is showing mixed signals, with large-cap names like TCS, HCL Tech, and Wipro trading at critical levels. Here's a breakdown of how each is positioned and which one presents the better opportunity right now.
Jain explained that TCS share price is currently trading around its key support level of ₹ 3,177. The stock is showing signs of weakness, and a breach below this level could accelerate selling pressure, dragging it down toward ₹ 3,000. Until the support holds and there's clear evidence of buying, TCS remains vulnerable.
HCL Tech shares has recently closed a price gap near ₹ 1,600. The next gap lies in the ₹ 1,526– ₹ 1,482 range — a zone where buyers could step in. If bullish price action develops around this area, it may offer a short-term bounce back to ₹ 1,650. Traders should watch closely for reversal signals before entering, according to Anshul Jain.
Wipro, meanwhile, has been consolidating in a tight range between ₹ 275 and ₹ 235 for the last 78 days. This setup makes it the most straightforward trade among the three. A decisive breakout above ₹ 275 would signal fresh momentum and offer a clean buying opportunity, belives Jain.
Wipro share price looks most promising on a breakout above ₹ 275.
HCL Tech shares is worth watching for a bounce near its gap support.
TCS share price remains weak and should be avoided unless ₹ 3,177 holds firmly.
'Short-term, Wipro offers the best potential, but only above the breakout level,' said Jain.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.