[ad_1]
Shares of HCL Technologies were up 3 per cent to Rs 1,135 on the BSE in Friday’s intra-day trade in an otherwise weak market. The rally comes after the IT major delivered revenue growth of 1.1 per cent quarter-on-quarter (QoQ) in constant currency terms in March quarter (Q4FY22), with a strong growth in services, which was up 5 per cent QoQ in CC terms. Meanwhile, earnings before interest and tax margin (EBITM) declined by 110 basis points to 17.9 per cent.
The stock rebounded 5 per cent from its intra-day low of Rs 1,083.55 on the BSE. At 09:43 am; it traded 2.8 per cent higher at Rs 1,130 as compared to 0.90 per cent decline in the S&P BSE Sensex. The stock has underperformed the market by falling 5 per cent in the past one month, as compared to 1 per cent decline in the S&P BSE Sensex. Earlier, it had hit a record high of Rs 1,377 on September 24, 2021.
HCL Tech has guided for revenue growth of 12-14 per cent CC in FY23 on the back of continued traction in the services business, healthy deal intake and deal pipeline (close to all time high). The management guided for 18-20 per cent EBITM for FY23, considering supply-side challenges, planned investments in Mode 2 capabilities and markets.
“The company has signed 6 large services and 4 product deals across technology & services, life sciences & healthcare and public services verticals for a total new deal total contract value of USD2.3 billion (6 per cent QoQ). Broad-based demand, robust deal intake and pipeline augur well for revenue acceleration”, analysts at Emkay Global Financial Services said.
However, the brokerage firm has cut FY23/FY24 EPS estimates by 2.7 per cent-3 per cent, factoring in Q4 performance and FY23 guidance. “Revenue growth momentum is encouraging; however, pressure on services margin led to earnings cut, “the brokerage firm said with a ‘buy’ rating on the stock and target price of Rs 1,400 per share.
On the contrary, analysts at Motilal Oswal Financial Services (MOFSL) believe that higher exposure to cloud, which comprises a larger share of non-discretionary spend, offers a better resilience to its portfolio in the current context. “The strong sequential growth within services, robust headcount addition, healthy deal wins, and a solid pipeline indicates an improved outlook,” MOFSL added.
The brokerage firm also expects the IT services firm to emerge stronger on the back of increased enterprise demand. “Given its deep capabilities in the IMS space and strategic partnerships, investments in cloud, and digital capabilities, we expect HCL Tech to emerge stronger on the back of an expected increase in enterprise demand for these services,” the brokerage firm added.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
[ad_2]
Source link