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Shares of HCLTech rose as much as 5% in early trading on Monday after India's No.3 IT services provider projected growth in most verticals and geographies in the upcoming quarter.

HCLTech, which hit the highest since March 19, was the top gainer in the Nifty 50 index and IT services index, which were up 0.2% and 0.8%, respectively, with both the indexes hitting a record high.

The Noida-based company on Friday reported a 6.7% rise in first-quarter revenue.

At least 18 analysts raised their target price on the company after the results, with the median price target up at 1,560 rupees from 1,506.50 rupees a month earlier.

HCL shares, which gained about 9% since reporting last quarter's results in April, are up 10% so far this year, compared with 10.4% gains in the IT index.

Analysts expect the discretionary spending by clients to return later this year, with expectations around interest rate cuts in the United States, a key market for Indian IT services companies.

Centrum Broking analysts said they expected gradual improvement in revenue growth, led by ramping up of recently signed deals and growing traction in AI-based solutions.

HCLTech said it expected all verticals and markets to see sequential growth, except financial services due to a deal impact, adding good deal bookings are likely in the next few quarters.

Management commentary indicated some positives such as stability in high tech, services verticals as well as likely ramp up in financial services in the second half of the year, Morgan Stanley said in a note.

Larger rival Tata Consultancy Services, which reported last week, also signalled early signs of revival for the IT sector, grappling with sluggish demand. Another larger peer Infosys will report quarterly results later this week.

HCLTech is trading at a price-to-earnings ratio of 26.5x (last 12 months), trailing larger rivals TCS and Infosys, which are at 32.5x and 27.04x, respectively.