HCL Technologies’ share price surged 3.49% to Rs 1,266.50 during the intra-day trade on Friday, a day after the IT firm reported a 9.8% growth in consolidated net profit, amounting to Rs 3,832 crore, in the second quarter of the current fiscal year. The company’s consolidated revenue from operations surged by over 8% to reach Rs Rs 26,672 crore. HCL Tech expects organic revenue growth for fiscal 2024 to be between 4% and 5% in constant currency terms, as opposed to its prior view, which called for an increase between 6% and 8%, as reported by Reuters. The Board of Directors also declared an interim dividend of Rs 12 per equity share of Rs 2 each of the company for the Financial Year 2023-24. The share price of HCL Tech fell 2.76% in the last one month, while it surged 15.68% in the last six months and a whopping 26.34% in the last one year.
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Should you buy, sell or hold HCL Tech shares?
Jefferies: HOLD – Target Price : Rs 1,240
“HCL Tech’s revised organic growth guidance of 4-5% has narrowed its growth premium vs. peers, which may reverse the 11% re-rating its stock witnessed since Mar-23. We cut our estimates by up to 1.5% and expect HCL Tech to deliver 10% EPS Cagr over FY23-26. Maintain Hold with rolled-over Target Price of Rs 1,240 based on 18x PE.”
HDFC Securities: ADD – Target Price: Rs 1,285
“HCL Tech’s (HCLT) Q2 print was lower on revenue but surprised on margin (stronger services margin supported by a recovery in the ERS segment). Key positives include recovery in ERS business following recent underperformance to pure-play peers, continued outperformance in BFSI vertical vs. peers and strong improvement in operating performance with scope for further increase in margin. On the flip side, volatility in discretionary (cut in the guidance) and weaker cash generation were the negatives. We marginally cut our fair value and maintain ADD on HCL Tech with a Target Price of Rs 1,285, based on 18x Sep-25E EPS (5Y/10Y average at 17x, 16x).”
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Axis Securities: HOLD – Target Price: Rs 1,250
“Global uncertainties leading to delayed spending decisions pose a challenging environment to HCL Tech and will impact its performance in the near term. Moreover, supply-side constraints will take some more time to ease off. We recommend a HOLD rating on the stock and assign an 18x P/E multiple to its FY25E earnings of Rs 69.3/share to arrive at a Target Price of Rs 1,250/share, implying an upside of 2% from the CMP.”
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InCred Equities: ADD – Target Price: Rs 1,273
“We retain HOLD rating on HCLT with a higher target price of Rs 1,273 (Rs 1,125 earlier) as we roll forward to FY26F estimates. We model a 7.5% US$ revenue CAGR over FY23-26F & a 11.3% PAT (Rs) CAGR and retain our 1.6x target PE/G multiple to arrive at a target P/E multiple of 18x. Improving profitability, prudent capital allocation, healthy cash generation and 4% dividend yield provide cushion, in our view. Accelerated deal velocity, lower attrition and software business improvement are upside risks. Weak execution is a key downside risk.”
