HCLTech rises 3% on strong deal wins, healthy Q2 earnings

Investors seem to have taken the cut in revenue growth guidance in their stride. HCLTech recorded net profit of Rs 3,832 crore, growing 8.4 percent over the previous quarter, beating analysts estimates

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HCL Technologies opened more than 3 percent higher on October 13 as investors shunned jitters from the company’s decision to cut its revenue growth guidance for FY24 in favour of expectations of an outperformance against peers despite the lower forecast.

The IT company on October 12 reported better-than-expected net profit and largely in-line topline numbers for the July-September quarter. Total contract value was at an all-time high at $3.96 billion, a big jump from $1.56 billion in the previous quarter, which came after seven consecutive quarters of $2 billion-plus in deal wins.

At 09.29 am, HCLTech was trading at Rs 1,264.15 on the National Stock Exchange, 3.30 percent higher from the previous close.

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Despite resilient earnings, the IT major still followed rival Infosys cutting the growth guidance for FY24. It reduced the revenue growth guidance to 4-5 percent from 6-7 percent in the previous quarter. Services revenue guidance was also revised down to 4.5-5.5 percent in constant currency terms. Margin guidance, however, was retained at 18-19 percent for FY24.

Most brokerages do not see the change in growth guidance as a major negative for HCLTech, as the move was expected given the difficult macro environment.

Morgan Stanley said that despite the guidance cut, HCL is still positioned to deliver better revenue and EBIT margins compared to larger peers.

Bernstein, however, said the guidance cut will reduce HCL’s degree of outperformance against its peers.

Also Read | HCLTech Q2 results: Net profit jumps 9.92% YoY to Rs 3,833 crore; revenue grows 8%

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