HCL Tech shares fell 1.60% to Rs 1054.75 on Friday on profit booking after the IT giant, the previous day reported a higher-than-expected profit for the December quarter supported by strong deal wins, but lowered its full-year revenue view noting seasonal challenges in the fourth quarter. The company reported a 19% rise in consolidated net profit at Rs 4,096 crore for the December quarter (Q3FY23) compared to the same period the previous year. On a sequential basis, the profit after tax (PAT) rose 17% from Rs 3,489 crore in the previous September quarter. The company’s board has approved an interim dividend of Rs 10 per equity share for FY23. The record date is set as 20 January 2023. The payment for the said interim dividend shall be made on 1 February 2023. HCL Tech shares closed 1.6% or Rs 17.10 higher at 1071.90 on Thursday.
HCL Tech likely to underperform peers; ‘HOLD’
“While we see strong sustainable demand (transformational/cost-takeout deals) driving growth for the sector – HCLT is likely to underperform peers, primarily due to its unfavourable business mix (33% rev from P&P and ERD). Inexpensive valuations and high dividend yield limit the downside potential. ‘HOLD/SU’ with TP of INR1,220,” said Nuvama Institutional Equities.
HCL Tech delivered all-rounder performance in Q3
“HCL Tech delivered an All-Rounder performance in Q3. Across the metrics, the company reported a big beat. The constant currency (CC) revenue growth of 13.1% YoY was aided by the services business which grew by 15.4% YoY & a big beat in revenue growth of 5% Q-o-Q on a CC basis. The biggest positive was the EBIT margin, which stood at 19.6% aided by a sharp decline in attrition to 21.7% from 23.8% in the previous quarter. A strong top line and margin expansion led the net profit to grow 19% YoY. The company did narrow its revenue & margin guidance but it remains in line with the expectations. Overall, the company has delivered a strong show in Q3,” said Veer Trivedi, Research Analyst, SAMCO Securities.