HCLTECH vs TECHM
Side-by-side comparison of HCL Technologies Ltd. and Tech Mahindra Ltd.. Descriptive only — not investment advice.
HCL Technologies Ltd.
IT
Quality Score: 55/100
Tech Mahindra Ltd.
IT
Quality Score: 50/100
At a glance
| Metric | HCLTECH | TECHM |
|---|---|---|
| Quality Score | 55/100 | 50/100 |
| P/E (trailing) | 18.5 | 27.4 |
| Forward P/E | 14.2 | 17.4 |
| ROE | +23.4% | +16.6% |
| Profit margin | +12.8% | +8.5% |
| Debt-to-equity | 6.93 | 7.27 |
| Dividend yield | +8.48% | +3.44% |
| 1Y price return | -31.8% | -1.1% |
| From 52w high | -35.2% | -20.0% |
| Analyst rating1 = Strong Buy, 5 = Strong Sell | 2.90 | — |
Highlighted value = better on the metric (lower for P/E, D/E, drawdown, analyst rating; higher elsewhere). Descriptive only.
Snapshots
HCL Technologies (Rs 1,131.7) has declined 31.77% over the past 12 months and trades 35.21% below its 52-week high, sitting below both the 50-DMA (Rs 1,207.11) and 200-DMA (Rs 1,419.16). The trailing PE of 18.52 (forward PE 14.18) sits above most large-cap IT peers despite a quality score of 40 that ranks last among the 6 tracked peers. ROE of 23.36% and four consecutive years of positive FCF provide a counterweight to the weak price and earnings-growth trends.
Tech Mahindra (TECHM) trades at ₹1,483.5, roughly flat over 12 months (-1.1%) and 20% below its 52-week high. The stock sits just below its 200-DMA at ₹1,490, while posting an 11.3% gain over three months. Among six large-cap IT peers, TECHM ranks fifth on ROE (16.61%) and carries a D/E of 7.27 — the highest in the group — alongside a trailing PE of 27.4 that is above every comparable peer.
Pros
- ✓ROE of 23.36% exceeds WIPRO (15.44%) and TECHM (16.61%) peers, with 4 of the available years recording ROE above 15%, pointing to consistent capital efficiency above the sector floor.
- ✓Forward PE of 14.18 vs trailing PE of 18.52 implies the market is pricing in meaningful near-term earnings recovery; forward PE is broadly in line with TCS (15.71) and WIPRO (14.36) and below TECHM (26.12).
- ✓Positive free cash flow in 4 of the available years (persistence consistency score 61) supports dividend coverage; the declared yield of 8.48% at prevailing price has been funded by operating cash generation in recent periods.
- ✓Recent partnership announcements spanning Volkswagen e.solutions, Pegasystems AI modernization, and Sarvam AI unicorn participation extend the enterprise and AI pipeline across automotive and financial services verticals.
- ✓Revenue has grown at a 5-year CAGR of 12.6% and earnings at 15.9%, suggesting the core business has expanded meaningfully over the medium term.
- ✓Debt trend is classified as falling, and FCF was positive in 4 of the available years, indicating some capacity to generate cash even during a period of elevated balance-sheet leverage.
- ✓Dividend yield of 3.44% is among the higher yields in the large-cap IT space, providing a return component independent of price appreciation.
- ✓Forward PE of 17.4 represents a 36% discount to the trailing PE of 27.4, indicating the analyst community embeds material earnings growth in near-term estimates for the stock.
Cons
- ✗Five-year earnings CAGR of -0.2% against revenue CAGR of 5.3% indicates margin compression has been a persistent feature rather than a single-year anomaly.
- ✗Composite quality score of 40 ranks 6th of 6 tracked IT peers; relative to TCS (62), LTM (65), and INFY (65), HCLTECH carries the weakest quality profile in the cohort while trading at a premium PE to INFY and WIPRO.
- ✗D/E ratio of 6.94 stands materially above the net-cash or near-zero-debt profiles of TCS and INFY, introducing balance-sheet risk in a rising-rate or revenue-slowdown scenario.
- ✗Price is 31.77% below 12-month levels and 35.21% off the 52-week high, trading below both the 50-DMA and 200-DMA with the nearest resistance at Rs 1,198.3 (5.9% above current price) and further resistance at Rs 1,257 and Rs 1,447.
- ✗D/E of 7.27 is the highest in the peer group by a wide margin; for an IT-services business where peers carry D/E well below 1.0, this level of leverage is a structural outlier and warrants scrutiny of the underlying debt composition.
- ✗ROE of 16.61% is fifth among six peers; TCS (48.4%), INFY (31.44%), and HCLTECH (23.36%) all generate substantially higher returns on equity, indicating a meaningful gap in capital efficiency.
- ✗Trailing PE of 27.4 is above all six peers despite the below-median ROE and quality score of 46 (fourth of six), creating a premium-valuation / below-median-quality combination.
- ✗The stock has spent extended time below its 200-DMA; the 52-week drawdown is -20.0% and the 12-month price return is -1.1%, underperforming several peers in absolute terms.
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