USD 2.3 bn worth new deals to bolster margins in next 2 quarters, says analyst - Buy on dips/Hold HCL Tech shares with 6-12-month view

Even as HCL Technologies Limited has reported a below than expected July-September quarter earnings results, the view on this large cap IT stock is still positive for market expert Avinash Gorakshakar. The Director Research at Profitmart was bullish on this stock on the back strong order book.

Despite a hit on company’s margins during the quarter ended 30 September 2021, the new orders worth USD 2.38 billion augur well for it. It has recorded a growth of 38 per cent, he added.

See Zee Business Live TV Streaming Below:

“We have delivered a healthy performance this quarter marked by strong growth across our services portfolio led by our Digital Business, Engineering and Cloud Services. We had impressive client additions across all categories, reflecting strong demand and relevance of our offerings across all our client groups. We signed 14 large new deals which helped us to record net new booking of $2.3 B, a growth of 38% YoY. Our net employee addition hit an alltime high of 11,135 this quarter. Our robust pipeline and continued strong employee ramp up augurs well for our business momentum going forward.”, said C Vijayakumar, Chief Executive Officer (CEO) and Managing Director (MD) said.

He said that stock markets may not take the subdued margins, too kindly on Monday, when the markets reopen. However, the commentary remains positive and it may see some recovery in its margins because of strong orderbook in the third and fourth quarter, he opined.

Investors who have this stock in their portfolios must Hold this stock, he recommended. He also suggested buy on dips on Monday. It can offer good risk-to-reward to investors who have a 6-12-months view on it, he further said.

HCL Tech shares ended at Rs 1246 on Thursday, down 1.5 per cent from the Wednesday closing price. Results were declared by the company after markets were closed.        

HCL Technologies Limited reported its second-quarter earnings for the financial year 2021-22 lower than street’s expectations. The revenue growth for the reporting quarter was 2.9 per cent up quarter-on-quarter (qoq) as against the expectations of 4-5 per cent.

The tech major registered a growth of 1.6 per cent on-quarter and 3.9 per cent year-on-year (YoY) in the net income of Q2FY22 at Rs 3,265 crore. Revenue in rupee terms grew by 2.9 per cent QoQ and 11.1 per cent YoY to Rs 20,655 crore in Q2FY22. Street expected YoY revenue growth to 13 per cent.

See Full Story Here

FY 2022 Guidance

- Revenue expected to grow in double digits in constant currency for FY’22.

- EBIT margin expected to be between 19.0% and 21.0% for FY’22.