HCL Technologies falls 6% post-December quarter results; global brokerages remain mixed

HCL Technologies Ltd fell nearly 6 per cent in morning trade on Monday as consolidated net profit for the quarter ended December declined 13.6 per cent to Rs 3,442 crore from Rs 3,969 crore in the corresponding quarter last year.

However, on a sequential basis, the IT major reported a 5.6 per cent QoQ rise in the consolidated profit at Rs 3,442 crore for the quarter ended December 31, 2021.

It had posted a profit of Rs 3,259 crore posted in the previous quarter ended September 30, 2021. Revenue from operations grew 8.1% QoQ to Rs 22,331 crore compared to Rs 20,655 crore posted last year.

Global brokerages remain mixed on HCL Technologies post Q3 results. UBS maintained its sell rating on HCL Technologies post Q3 results with a target of Rs 925.

Beat in Q3 revenues were largely driven by software spike. Given strong beat and TCV wins, we expect consensus forecasts to move upwards, said the note. This could be offset by a lack of assurance on FY23E rev growth acceleration.

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Another global investment bank, Credit Suisse maintained its outperform rating post Q3 results and raised the target price to Rs 1,650 from Rs 1,450 earlier.

The company displayed solid revenue growth but margins were disappointed. The company is well-positioned for a stronger FY23 factoring in 3Q results, increasing FY22E-FY24E EPS by 1-8%.

The company said the total contract value (TCV) of its new deal was at $2,135 million registering 64% YoY growth. It said its revenue is expected to grow in double digits in constant currency for FY22.

EBIT margin is expected to be between 19% and 21% for FY22. The attrition was at 19.8% against 15.7% posted in the previous quarter.

The company declared a dividend of Rs 10 per share for Q3, being the 76th consecutive quarter of dividend pay-out. The record date for interim dividend payment has been fixed on December 22, 2022.