The share price of HCL Technologies (HCL Tech) increased 2.79 percent to Rs 1,066.45 today as the IT giant had no unpleasant shocks. At 9:20 am on the NSE, the shares were trading 1.91 percent higher at Rs 1,057.35.
In comparison to the same quarter last year, the company’s net profit increased 11% year over year to Rs 3,983 crore, above expert expectations. The revenue increased by 18% to Rs 26,606 from Rs 22,597 crore in the same period last year. The interim dividend payment date has been set for May 9, 2023, and the record date has been established as April 28, 2023. The large IT corporation also announced an interim dividend of Rs 18 per share, bringing the total payout for the fiscal year 2023–2024 to Rs 48 per share.
Shares of HCL Tech: Should You Buy, Hold, or Sell?
According to Jefferies, HCL Tech’s constant currency sales of $3.2 billion, which were down 1.2%, were in line with expectations and at the low end of HCL Tech’s forecast range. Due to increased direct and SG&A expenses, EBIT margins of 18.2% were down 140 bps sequentially and below expectations. However, owing to larger than anticipated other revenue, the profit of Rs 3,980 crore exceeded expectations.
Deal wins decreased by 8% year over year to $2.1 billion, although management’s forecast of 6 to 8% growth in FY24 is still a respectable level. A minor margin increase in FY24 is shown by the margin projection of 18-19% compared to FY23 margins of 18.2%. With a target price of Rs 1,050 for the company, Jefferies said that the dividend distribution of Rs 48 per share “remains strong.”
Nomura India, like Jefferies, does not see significant growth for the stock. Due to anticipated lower sales, margin, and tax rates, this brokerage has reduced its FY24–25F EPS predictions for HCL Tech by 4%. Nomura has lowered its target price for the company from Rs. 1,150 to Rs. 1,100.
“With a revised FV of Rs. 1,225 (from Rs. 1,235 earlier), we maintain our EPS estimates and revenue estimates (6.3% revenue growth in calendar quarter).” According to analysts at Kotak Securities, a more balanced portfolio mix with momentum in applications and good posture in vendor consolidation and cost take-out mandates may mitigate weakness in ERD and product portfolios and generate peer-matching growth.