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Shares of HCL Technologies Ltd surged more than 3% to 980 apiece on the BSE after the IT company beat estimates with 7% rise in its Q2 FY23 net profit at 3,489 crore and also raised its full-year revenue guidance. Its revenue for the three months ended September 30, 2022 came in at 24,686 crore.

Amid widespread fears of global recession, HCL Tech said it clinched a stellar quarter on all fronts, delivering strong performance in top line. The confidence is in line with the spending patterns and trends that the company sees in the market, HCL Tech CEO C Vijayakumar told reporters at a briefing.

“HCL Tech surprised positively on growth, margins and unexpected raise in FY23 CC growth guidance to 13.5-14.5%. Our conviction is driven by strength in cloud and infra, improving capabilities in app modernisation and momentum in ER&D, where it is the 3rd largest global player. Client push toward cost saves should be beneficial for HCL Tech, aiding market-share gains," said Ambit in a note.

Analysts at brokerage and research firm Ambit said that HCL Tech shares remain top stock pick in the IT sector and has maintained Buy rating on the IT stock with a target price of 1,180 apiece.

“The strong growth guidance and margin performance (despite wage hikes) in an environment, where the demand for IT services is expected to be incrementally weaker, should help improve investor confidence on its business and lower the valuation gap with larger Tier 1 IT services peers. We continue to see HCL Tech’s defensive business as a positive in a demand constrained environment," said domestic brokerage Motilal Oswal.

The brokerage house has increased its estimates for FY23 and FY24 by 4%-6% and has reiterated its Buy rating with a target price of 1,240 apiece. “Given its capabilities in the IMS and Digital space and strategic partnerships, investments in Cloud, we expect HCLT to emerge stronger on the back of an expected increase in enterprise demand for these services."

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

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