Active Stocks
Tue Apr 16 2024 15:59:30
  1. Tata Steel share price
  2. 160.05 -0.53%
  1. Infosys share price
  2. 1,414.75 -3.65%
  1. NTPC share price
  2. 359.40 -0.54%
  1. State Bank Of India share price
  2. 751.90 -0.65%
  1. HDFC Bank share price
  2. 1,509.40 0.97%
Business News/ Markets / Stock Markets/  HCL Tech's Q4 earnings in line with estimates. Here's how stock price may react on Friday
BackBack

HCL Tech's Q4 earnings in line with estimates. Here's how stock price may react on Friday

For FY24, HCL Tech guided a revenue growth of 6% to 8% in CC terms. Services revenue growth is expected in the range of 6.5% to 8.5% for the full year. While the EBIT margin is seen from 18% to 19%.

HCL Tech has also declared an interim dividend of ₹18 per equity share for FY24. This would be the first interim dividend of the current financial year. (AP Photo/Lo Sai Hung)Premium
HCL Tech has also declared an interim dividend of 18 per equity share for FY24. This would be the first interim dividend of the current financial year. (AP Photo/Lo Sai Hung)

HCL Tech's fourth-quarter earnings are broadly in line with estimates. The company witnessed double-digit growth in YoY terms, however, sequentially the performance was feeble. Also, the company recorded a single-digit drop in new deal wins. However, the IT-giant's FY24 guidance looks encouraging. Overall, HCL Tech's Q4 results are not seen as a shocker and hence the market is expected to be appreciative of the stock price.

In Q4FY23, HCL Tech's consolidated PAT stood at 3,983 crore up by 10.85% YoY but down by 2.8% QoQ. Revenue from operations came in at 26,606 crore increasing by 17.74% YoY but marginally down on a QoQ basis. EBIT as well witnessed an 18.8% YoY growth but a downside of 7.5% QoQ to 4,836 crore in Q4FY23.

Similarly, in constant currency, HCL Tech's revenue dropped by 1.2% quarter-on-quarter but rose by 10.5% year-on-year.

Additionally, the company's new deal wins dropped by 8% YoY to $2.074 billion in Q4FY23. While it continued to witness a drop in LTM attrition to 19.5%.

For FY24, HCL Tech guided a revenue growth of 6% to 8% in CC terms. Services revenue growth is expected in the range of 6.5% to 8.5% for the full year. While the EBIT margin is seen from 18% to 19%.

Finally, HCL Tech has also declared an interim dividend of 18 per equity share for FY24. This would be the first interim dividend of the current financial year.

HCL announced its Q4 earnings after market hours and hence investors will react to the performance in Friday's session.

On Thursday, HCL Tech traded volatile to end at 1,037.55 apiece broadly flat on BSE compared to the previous session. The company's market cap is over 2.81 lakh crore.

Veer Trivedi, Research Analyst, SAMCO Securities said, "After two major misses in TCS and Infosys, the street was expecting another disappointment from HCL tech. The company however surprised on the positive side as the Q4 results came out in line with the expectations. There was a mild miss in revenue however, the profits came out a little better than expected aided by growth in other income. Overall, their revenue was down 0.3% QoQ, however, their services business grew 0.6% QoQ which is a positive. The guidance of 6-8% in CC for FY24 is good and so is the margin guidance of 18-19%. The deal wins have been stable above USD 2 bn and an increase in headcounts increases conviction on the sustainability of demand."

Overall, Trivedi believes that HCL's

result has not been a shocker like its leading IT peers and thus the street would be appreciative of the same.

Along similar lines, Manish Chowdhury, Head of Research at Stoxbox also believes that in HCL Tech's Q4, one thing which stands out is that the results apparently do not look as bad as other heavyweights such as TCS and Infosys.

However, Chowdhury expects a deterioration in the demand environment, especially on the telecommunication and manufacturing verticals, which also becomes evident in the FY24 revenue guidance which is sharply lower than that achieved in the current fiscal year.

Furthermore, Chowdhury added, "The company’s operating efficiencies looks in place as seen from the 18-19% margin guidance provided for FY24. We would closely monitor whether the current challenges in the IT sector leads to a further downgrade to the guidance going forward."

Meanwhile, Mitul Shah, Head of Research at Reliance Securities said, "HCLT reported broadly in-line results for the quarter with margins slightly below our expectations while its PAT exceeded our estimates. Services business revenue grew 0.6% QoQ and 10.6% YoY in constant currency, which we consider is healthy. We expect HCLT to report a healthy revenue, driven by consistent transformation deal wins and increasing focus on ER&D services. At present, we have BUY recommendation on the HCLT."

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 20 Apr 2023, 08:24 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App