HCL Technologies share price plunged over 8% on Tuesday after the company reported its earnings for the third quarter of FY25. HCL Tech shares declined as much as 8.46% to ₹1817.20 apiece on the BSE.
The third-largest IT services company in India, HCL Technologies, reported a net profit of ₹4,591 crore in the third quarter ended December 2024, recording a rise of 8.4% from ₹4,235 crore in the previous quarter.
The IT giant’s revenue in Q3FY25 grew 3.6% to ₹29,890 crore from ₹28,862 crore, quarter-on-quarter (QoQ). Revenue in USD terms was up 2.6% at $3,533 million from $3,445 million, sequentially.
HCL Technologies narrowed its FY25 overall and services Constant Currency revenue growth guidance to 4.5%-5% from 3.5-5% but retained its 18-19% EBITM guidance.
At the operating level, EBIT increased by 8.6% to ₹5,821 crore from ₹5,362 crore, while EBIT margin improved by 90 bps to 19.6% from 18.7%, QoQ.
HCL Tech also declared an interim dividend of ₹12 per share and a special dividend of ₹6 per share.
“HCL Technologies Q3FY25 operating performance was a tad below our estimate. Revenue growth of 3.8% QoQ CC was slightly lower than our estimate of 4.2%. The deal pipeline is near an all-time high, despite the lack of mega deals. The discretionary spending environment has seen some improvement, though planned deal ramp-downs may lead to some softness in Q4. We trim FY25-27E EPS by 0.3-1.7%, factoring in the Q3 performance,” said Dipeshkumar Mehta, Senior Research Analyst at Emkay Global Financial Services.
After an 8% and a 28% rally in HCL Tech stock price in three months and six months, respectively, Mehta expects the stock to consolidate in the short term due to near-term challenges.
The brokerage firm retained an ‘Add’ rating on HCL Technologies shares with a target price of ₹2,000 apiece at 26x Dec-26E EPS.
Brokerage firm Nuvama Institutional Equities remains positive on HCL Technologies on the back of its superior growth versus peers, high FCF generation and capital allocation.
“However, at 28.5x FY26E PE, its valuation appears full. We are tweaking FY25/26 estimates -0.6%/-3% on slightly lower growth. We are rolling forward to 28x FY27E PE and updating FY26/27 USDINR assumption to 86.5,” said Nuvama Equities.
The brokerage firm downgraded HCL Tech shares to ‘Hold’ and slightly raised the target price to ₹2,150 apiece from ₹2,125 earlier.
HCL Technologies share price has fallen over 5% in January, and the IT stock is down 8% in one month. HCL Tech stock gained more than 17% in one year, outperforming the benchmark Sensex with 5.6% gains.
Analysts expect today’s drop in HCL Technologies share price to be a good opportunity to buy.
“HCL Technologies share price has a strong base at ₹1,710 apiece mark, and this dip should be seen as a buying opportunity. HCL Tech stock may rebound and touch the ₹1,800 per share mark in the near term. Hence, HCL Tech shareholders are advised to maintain a stop loss at ₹1,710 and accumulate more,” said Sumeet Bagadia, Executive Director at Choice Broking.
According to him, HCL Technologies stock may give strong upside movement after trend reversal on Dalal Street and touch ₹1,900 and ₹1,950 apiece after breaking above ₹1,800 on a closing basis.
“Fresh investors can also maintain buy-on-dips, maintaining a strict stop loss at ₹1,710 for the short-term target of ₹1,900 and ₹1,950,” Bagadia added.
At 9:30 AM, HCL Technologies shares were trading 8.15% lower at ₹1,823.55 apiece on the BSE.
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 making any investment decisions.
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