HCL Technologies' reports in-line Q3FY25 earnings: Should you buy, sell or hold its shares?

Noida-based HCL Technologies shares shall be in focus after the IT giant's Q3 earnings released after market hours on Monday. For the October-December quarter, the company's consolidated net profit was recorded at Rs 4,591 crore, a 5.54 per cent growth year-on-year. The company's net profit in the year-ago period stood at Rs 4,350 crore.

The revenue from operations during Q3FY25 rose 5 per cent on-year to Rs 29,890 crore in comparison to Rs 28,446 crore in the same period last year. The IT giant also announced an interim dividend of Rs 18 per share, reflecting its commitment to shareholder returns.

For the full fiscal year FY25, HCLTech has revised its revenue growth guidance, raising the lower end by 100 basis points.The updated constant currency revenue growth guidance stands at 4.5 to 5 per cent. The company retained its EBIT margin guidance at 18 to 19 per cent for the fiscal year.

C VijayKumar, CEO of HCL Technologies, said the company’s service lines remain robust and well-diversified across geographies.

Additionally,  VijayKumar said that during the quarter the company bagged 12 deals that include seven service deals and five from HCL Software. The total contract bookings (TCB) for the quarter amounted to $2.1 billion. 

Should you buy, hold or sell HCLTech shares after its Q3FY25 show?

Hong Kong-based global brokerage has reiterated its 'hold' call on the stock with the target raised to Rs 1,882 from the earlier Rs 1,761 per share. The pegged target implies a potential downside of over 5 per cent from the last close. As per the brokerage, the IT giant reported an in-line Q3 with a slight revision in its constant currency (CC) revenue growth guidance for FY25.  Further, the company's management is seeing Improved demand momentum across smaller deals.

The unchanged mid-point FY25 organic growth guidance was slightly disappointing amid demand improvement, it noted. 

Meanwhile, Jefferies also reiterated 'hold' stance on the counter with the target slashed to Rs 2,060 from Rs 2,100, implying potential gains of nearly 4 per cent. In accordance with the global brokerage, the company's Q3 beat estimates on the back of higher margin, nonetheless, revenue growth missed estimates slightly. 

Jefferies underscored that the management commentary was upbeat on TCV to revenue conversions & discretionary IT spends. The company's revised growth guidance of 4.5-5 per cent for FY25 points to a weak Q4 exit. Also, the brokerage slashed revenue/ EPS estimates by 1-2 per cent.