Home >Markets >Stock Markets >Edelweiss maintains buy rating on this stock with upside potential of up to 70%

IT major HCL Technologies reported net profit of 2,962 crore in the March quarter, which was down 25.6% on quarter-to-quarter (QoQ) basis due to a one-time tax expense. The company also declared an interim dividend of 16/share. Edelweiss Research maintains its Buy stance on the stock with an upside potential even as the company’s revenue growth came slightly below the brokerage’s expectations.

The brokerage in a note stated that the IT company posted a balanced growth across service lines, geographies and industries. By segment, IT and business services grew strongest while Financial services and lifesciences & healthcare were strongest across verticals. The company registered highest ever new deal booking of $3.1 billion, up 49% on a yearly basis. It is looking to expand in new emerging markets and verticals, it added.

Total employee count at the end of the year stood at 168,977 whereas its attrition rate fell to 9.9% during the fourth quarter.

‘’Margin dipped 250 bps to 20.4% due to headwinds from wage hike, seasonal decline in revenue and large number of fresh hiring. HCL Tech had built a very strong ecosystem of hyper-scalers with dedicated business units for the likes of Google, Microsoft, AWS, among others, and is now reaping the benefits of that’’, Edelweiss said.

HCL Tech expects double-digit revenue growth in constant currency terms for FY22 in view of the positive demand environment and robust deal pipeline. It won 19 new large deals in Q4 across industry verticals, including financial services, life sciences and healthcare, consumer goods, and manufacturing.

All-time high deal pipeline, robust margin and strong growth in key areas such as IT and business services, digital and cloud and product and platforms reaffirm our conviction in HCL, which continues to remain our top pick. Therefore, the brokerage maintains its buy stance on HCL Tech with a target price of 1,616 per share.

HCL Technologies declared its earnings after market hours on Friday. The shares of the IT company closed 0.56% lower at 955.80 apiece on the BSE.

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