HCLTech Shares Slump After Q4: Brokerages Advise Caution

HCLTech’s share price slumped sharply in the red as its earnings and guidance for the quarter ended March failed to impress investors.

What Happened: The IT giant reported a net profit of Rs 3,995 crore for the March 2024 quarter, showing a marginal increase from ₹3,981 crore in the same quarter of the previous year. However, there was a slight decline compared to the net profit of ₹4,351 crore reported in the December 2023 quarter.

Revenue for the quarter witnessed a 7% growth, with revenue from operations reaching ₹28,499 crore in Q4FY24 compared to ₹26,606 crore in the March 2023 quarter. The earnings per share (EPS) of the IT firm increased to Rs 14.72 in Q4FY24.

HCL Technologies saw an improvement in its EBIT margin which rose to 18.1% in Q4FY24, compared to 17.6% in the March 2023 quarter, marking a 48 basis points increase during the period.

The company’s board declared an interim dividend of 18 per equity share of ₹2 each for the financial year 2024-25, with the record date set for May 7.

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Analyst Reactions: Nomura maintained its “neutral” rating for the stock cutting the price target to ₹1,400 from ₹1,500. The brokerage said that the company posted a mixed bag of numbers for the quarter ended March. The analysts also highlighted that the company’s guidance for the year ending March 25 was weaker than expected.

Investec also maintained its “sell” rating for the stock with a price target of ₹1,300. The brokerage said that while the company had some great deal wins of large size, it would be difficult to replicate the same going forward. The analysts also added that the revenue guidance was weaker than expected.

Morgan Stanley, on the other hand, maintained its “overweight” rating for the stock with a price target of ₹1,730. The investment bank said that the company’s revenue for the March quarter was slightly higher than its estimates, but margins missed expectations.

Emkay downgraded the stock’s rating from “buy” to “add” with a target price of ₹1,600. The domestic brokerage firm said that the company’s March quarter numbers were below expectations. The firm noted that the IT company missed estimates on revenue due to the underperformance of the software business.

Price Action: HCLTech’s share price was down 3.53% to trade at ₹1,421.80 as the markets opened on Monday.

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