Reverse DCF

HCL Technologies: what the price is assuming

A normal DCF asks you to guess growth. Run backwards, it takes today's price and solves for the growth the market has already priced in — then you can judge whether this company can deliver it.

What the price assumes

Fair

To justify its price of ₹1206, this stock must grow earnings at 3% every year for 5 years. Our analysis caps realistic growth at ~4%. At that growth it is worth ₹1262 — upside of 5%.

Growth the price implies
3.1% a year
for 5 years, fading to 5%
It has actually compounded at
3.9% a year
net profit, FY23–FY26 · EPS 3.9%
The gap
-0.0 pp
5% downside if it only repeats history
Price today ₹1,206.1 Value at the reference growth ₹1,262
Why this baseline, and what it is built on

HCLTech demonstrates a strong promise track record, with multiple achieved targets and upward revisions to guidance. Management recently revised up their full-year company-level revenue growth guidance to 4% to 4.5% for FY26. Although the latest TTM sales growth is 2.95%, the strong track record and explicit, revised-up guidance support using the lower end of this range for g1 at 4.0%. The company has very low leverage, leading to a 10% discount rate. A 5-year stage-1 growth period with a 3-year fade to a 5% terminal growth rate is considered appropriate.

Through 2026-03-31

Your assumptions

Change any of these and the value moves. A valuation that flips on a one-point change in the required return is telling you something.

Value on these assumptions

₹1,261.93

Against today's price

+5%

8 projected years, then a terminal value at 5.0%.

Normalized net profit is discounted as a proxy for owner earnings, not full free cash flow. An analytical tool, not investment advice.

How to read this valuation

  1. Start from the price, not the forecast. A normal DCF asks you to guess growth and hands back a fair value. Run backwards, it takes today's price and solves for the earnings growth the market is already assuming.
  2. Compare that with what the company has done. The historical profit and EPS CAGR sit beside the implied number. A price that needs 25% a year from a business that has compounded at 10% is asking a lot, and the gap is the risk you are taking on.
  3. Then apply your own view. Change the growth rate, how long it lasts, how it fades and the return you require. A valuation that flips on a one-point change in the discount rate is telling you something about itself.
  4. Mind the caveats. Normalized net profit stands in for owner earnings, not full free cash flow; terminal growth is capped at 6%, roughly nominal GDP; cyclicals are flagged because a peak-earnings base overstates value. This is an analytical tool, not investment advice.