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Sunday, June 23, 2024

Should You Buy After HCL Tech Jumps 4% After Deal Wins At All-Time High in Q2?

<p>Following the release of the Q2FY24 results, HCL Technologies’ share price increased 4% to reach the day’s high of Rs 1,266.50 on the NSE in the early session on Friday. Revenue and profit both exceeded Street’s projections.</p>
<p>According to experts, the decrease in revenue was brought on by a more severe downturn in demand, which was caused by shifting expenditure priorities to core operations and fewer discretionary spending in the IT industry.<img decoding=”async” class=”alignnone wp-image-233061″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/10/theindiaprint.com-before-navratri-puducherry-sees-an-increase-in-digital-kolu-doll-sales-download-20.jpg” alt=”theindiaprint.com before navratri puducherry sees an increase in digital kolu doll sales download 20″ width=”1316″ height=”986″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/10/theindiaprint.com-before-navratri-puducherry-sees-an-increase-in-digital-kolu-doll-sales-download-20.jpg 259w, https://www.theindiaprint.com/wp-content/uploads/2023/10/theindiaprint.com-before-navratri-puducherry-sees-an-increase-in-digital-kolu-doll-sales-download-20-150×112.jpg 150w” sizes=”(max-width: 1316px) 100vw, 1316px” title=”Should You Buy After HCL Tech Jumps 4% After Deal Wins At All-Time High in Q2? 9″></p>
<p>HCL Technologies, an IT services provider, announced a 10% increase in its consolidated net profit for the three months ended in September 2023, coming in at Rs 3,832 crore. In the prior year, the same was at Rs 3,489 crore. In comparison to the same quarter previous year, operating revenue increased 8% to Rs 26,672 crore from Rs 24,686 crore.</p>
<p>HCL Tech maintained its FY24 margin target of 18–19%, which was substantially in line with brokerages’ expectations. However, the company reduced its FY24 revenue growth projection in constant currency terms to 5–6%.</p>
<p>Although JP Morgan rated HCL Tech as “Underweight,” BofA maintained its neutral position.</p>
<p>Although it increased the target price from Rs. 1,320 to Rs. 1,350, UBS retained its neutral stance on HCL Tech shares. Although the margin exceeded expectations, it was unexpected that the guideline would be trimmed, it added.</p>
<p>Goldman Sachs has kept its position neutral but increased its target price from Rs. 1,170 to Rs. 1,180. While noting lower FY24-26 topline by up to 1% and EBIT forecasts higher by up to 1% on better-than-expected cost management, the firm maintained its FY24 margin guide. EBIT was 5% above expectations, and the company also said that it maintained its FY24 margin target.</p>
<p>Due to what HCL Tech described as “marginal tweaks” to its forecasts, Kotak has maintained a buy rating on HCL with an unchanged price objective of Rs 1,410. We expected to be disappointed by the higher seek rates for the FY2024E revenue forecast. As a result of the services sector’s disappointment, we only slightly modify our projections. Our US$ revenue projections are down between 0.3% and 0.8% from FY2024 to FY2026E, according to the brokerage.</p>
<p>According to Kotak, HCLT has been able to maintain constant growth and have a diversified portfolio of businesses thanks to many years of investments in digital.</p>
<p>Based on 21x FY25E EPS, Motilal Oswal has a buy opinion on HCL Tech with a price objective of Rs. 1,410. The IT business reported a dismal 2QFY24, with sales increasing by only 1% QoQ in constant currency, falling short of Motilal’s forecast of 2.9% QoQ. “To account for the 1Q miss,” it wrote, “we have lowered our FY24/25 EPS estimates by 1.6/3.0 percent.”</p>

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