HCL Tech shares dip nearly 2% ahead of Q4 earnings. What should investors do?

Shares of IT services company HCL Technologies slipped 1.66 per cent to ₹1,046.15 per piece in Wednesday's trade ahead of the firm's March quarter earnings tomorrow. The stock has an average price target of ₹1,177.08, as per publicly available data with Trendlyne, which suggests a 12.39 per cent potential upside on the counter.

HCL Tech shares fell 3.68 per cent in the last one week, while it rose 5.09 per cent in the last six months. On a year-to-date basis, the stock surged 0.67 per cent.

The IT major will likely report weak earnings for the fourth quarter (Q4FY23) ended 31 March, 2023, as seasonal weakness and a decline in the software segment (product & platform-P&P) is expected to drag its performance.

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Analysts expect the company’s profit as well as Ebit margins to contract over the preceding quarter. Constant currency (CC) revenue could also decline 1-2 per cent sequentially, while profit de-growth could be seen in the range of 4-9 per cent.

The IT major's Ebit margin is expected to dip on a sequential basis to 18.1-18.6 per cent. This stood at 19.6 per cent in the December 2022 quarter.

How to trade HCL Tech stock?

"HCL Technologies has fallen below the 200DMA level of ₹1,030 and has come near the crucial support zone of ₹1,010 level from where one can anticipate some pullback and improvement in bias," said Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher.

In case of trading, Parekh said, "One can buy and accumulate the stock near the mentioned support zone and expect an upward move till ₹1,110 -1,120 levels, keeping a strict stop loss at ₹1,000 level."

Dividend history

In its board meeting scheduled to be held on 19 and 20 April, 2023 the company will also consider payment of its first interim dividend for fiscal 2023-24.

HCL Technologies has declared 85 dividends since 25 Sept, 2000. In the past 12 months, HCL Technologies has declared an equity dividend amounting to ₹48.00 per share, according to Trendlyne data.

At the current share price of ₹1046.20, this results in a dividend yield of 4.59 per cent.

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.