HCL Tech shares under pressure ahead of March quarter earnings on Thursday

Shares of HCL Technologies – India’s third largest IT services company – were under pressure during Wednesday’s session, ahead of its earnings for the January-March quarter of the financial year 2022-23 (Q4FY23) on Thursday, April 20, 2023.

HCL Tech shares declined more than two per cent to touch the day’s low at Rs 1039.5 per share on the BSE. At around 02: 00 PM, the stock quoted Rs 1041.10 per share, down Rs 22.40 or 2.11 per cent from Monday’s closing of Rs 1063.50 apiece on the BSE.

The stock reversed yesterday’s gains as the Street expects muted Q4 earnings for HCL Tech as same as the top two IT services companies – Tata Consultancy Services (TCS) and Infosys.

The IT stocks have been hammered by investors since the day the heavyweight TCS released its Q4 earnings on April 12, followed by Infosys results on April 13, which were mainly below expectations.

Nifty IT on Wednesday was among the top sectoral laggards, down more than 1 per cent on the NSE. Besides HCL Tech, heavyweights such as TCS, Infosys, Wipro, and Tech Mahindra were each down between 1-2 per cent on the NSE.

HCL Tech has declined nearly 5 per cent since April 12, from Rs 1094.5 per share to today’s day low level. The stock has been flat year to date, while it’s down marginally by 2.5 per cent in a year.

According to Zee Business research, HCL Tech’s profit is likely to fall by 6 per cent sequentially to Rs 3,850 crore, while both its dollar and rupee revenue may come flat in Q4FY23.

In constant currency (CC) terms, the earnings are likely to decline by 0.6 per cent and margins may drop by 1.3 per cent mainly due to negative operating leverage, Zee Business research said in its March quarter preview of HCL Tech.

Zee Business research estimates that the management may give earnings growth guidance between 6-8 per cent in CC terms and operating margin guidance of 18-20 per cent for FY24.

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(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)