HCL Tech share price tanked 2% to Rs 1087.75 today after the IT major’s Q1FY24 earnings missed analysts’ expectations. The company reported a nearly 8% on-year rise in consolidated net profit for the June quarter to Rs 3,534 crore. Consolidated revenue grew 12% on-year to Rs 26,296 crore. The board has recommended an interim dividend of Rs 10 a share. The company has fixed the record date as July 20 for the dividend payment. HCL Tech shares have fallen 3% in the last one month and have risen 20% in the past one year.
Should you buy, sell or hold HCL Tech shares?
HDFC Securities: ADD – Target Price: Rs 1230
“HCL Tech (HCLT) posted a weak Q1 but maintained its FY24E guidance (both on growth and margin). The revenue miss was largely due to ER&D services and the Telecom & Media vertical which had an aggregate revenue impact of -1% and -1.3% QoQ due to cuts in discretionary spending. We maintain ADD on HCLT with a target price of Rs 1,230, based on 18x Jun-25E EPS, factoring 10% EPS CAGR over FY23-26E,” said analysts at HDFC Securities.
Kotak: BUY – Fair Value: Rs 1200
“We forecast an organic c/c revenue growth rate of 5.3% for FY2024E, down from 6.3% earlier. Our revenue growth forecast was at the lower end of the guidance band prior to this quarter. We incorporate ASAP acquisition in our estimates—this acquisition will contribute 0.6% to FY2024E and 1.1% to FY2025E revenues. We cut our SoTP-based Fair Value to Rs1,200 from Rs1,225. The cut in EPS estimates is partly compensated by the rollover to June 2025E EPS in our financial model,” said analysts at Kotak Institutional Equities.
Nuvama: BUY – Target Price: Rs 1300
“HCLT’s weak Q1 performance makes meeting its FY24 guidance a tall ask. Yet, even if it misses its guidance (as we bake into our estimates) it will still be one of the fastest-growing large-cap (in IT Services). Its strong growth in services and lower exposure to the troubled BFSI segment imply a high probability of stable earnings growth. High dividend yield and inexpensive valuation provide a floor to the stock price,” said analysts at Nuvama Institutional Equities.