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Home / Markets / Stock Markets /  HCL Tech shares surge post Q4 results. Here's what brokerages say on the IT stock
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Shares of HCL Technologies Ltd jumped about 3% at 1,135 apiece in Friday's early deals on the BSE after the IT company reported a nearly 24% jump in its Q4 net profit at 3,593 crore whereas revenue for the March quarter rose 15% from a year earlier to 22,597 crore.

“Given its deep capabilities in the IMS space and strategic partnerships, investments in Cloud, and Digital capabilities, we expect HCL Technologies to emerge stronger on the back of an expected increase in enterprise demand for these services," said domestic brokerage Motilal Oswal which has a Buy rating on HCL Tech shares with a target price of 1,310 apiece.

HCL Technologies said it expects revenue for this fiscal year to grow between 12-14% in constant currency (cc). It also forecast EBIT margin in the range of 18-20% for FY23.

Those at Jefferies have also maintained Buy rating on the IT stock with revised price target of 1,360 on strong growth and reasonable valuations.

“While HCL Tech's Q4 revenues beat estimates, the 110bps QoQ fall in margins disappointed. PAT beat estimates due to forex gains and lower tax rate. Its FY23 growth guidance of 12-14% was the key positive from 4Q and implies a strong 14-16% growth in its services business. However its margin guidance of 18-20% for FY23 and higher tax rate drives 6-7% cuts to our EPS estimates," Jefferies' note stated.

HCL’s dollar revenue in the quarter grew 13.3% annually in constant currency to $2.99 billion, boosted by new deal wins and acceleration in clients’ digital agenda.

Brokerage Nirmal Bang believes HCL Tech too will see negative impact of the stagflationary environment developing in the western world, which may impact tech spending towards 2HFY23 and affect its FY23 guidance.

“However, we believe it is better placed in the new demand environment due to its enormous automation related skills and IP," the brokerage added and has an ‘Accumulate’ tag on the stock with target price of 1,247.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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