HCL Tech share: Experts give ’buy’ tag after Q1 results 2024. Should you buy?

Stock market today: After announcing better-than-expected Q1 results 2024 by Tata Consultancy Services (TCS), HCL Technologies' results for Q1FY25 also beat the market estimates. Hence, HCL Tech shares witnessed strong buying when the Indian stock market opened today. HCL Tech's share price today opened with an upside gap at ₹1,580 apiece and touched an intraday high of ₹1,636.40 within a few minutes of the Opening Bell. While climbing this intraday peak, HCL Tech shares logged an intraday gain of nearly 5 percent during early morning deals.

According to stock market experts, HCL Tech results for Q1FY25 have beaten the market estimates despite a dip in the EBITDA margins. The company's earnings during the first quarter of the current financial year received strong support from the telecom vertical. However, there are some concerns about the growth outlook for FY25 and persisting concerns about rising attrition.

HCL Tech results Q1FY25 review

Speaking on HCL Tech's Q1 results 2024, Manish Chowdhry, Head of Research at StoxBox, said, "HCL Tech's Q1FY25 results were a beat on all estimates; however, concerns with the company's growth in FY25 persist. The net profit included a one-time gain from the divestment of the JV with State Street, which will also significantly impact the Q2 topline. The topline health was aided by strong growth in the telecom vertical and retail vertical, which helped offset the decline in the healthcare and utilities verticals. The top line was also buoyed by healthy growth in the software segment, which was expected to decline owing to seasonality."

"The EBIT margin decline due to higher onsite expenses was less than expected, which reflects a focus on improving efficiency. However, the increase in attrition raises concerns amid a scarce resource environment. We expect growth to start showing in the numbers from H2 onwards as the offshoring of State Street is bound to impact Q2 as well. The management commentary on hiring plans, investments in GenAI partnerships and solutions, new deal ramp up, and visibility going ahead are key things to watch out for," said a StoxBox expert.

HCL Tech share price target

Expecting significant upside in HCL Tech shares after Q1 results 2024, Sumeet Bagadia, Executive Director at Choice Broking, said, “HCL Tech share has been on an upward trajectory, currently trading at a market price (CMP) of ₹1560.20. This suggests a strong bullish sentiment surrounding the stock. What's particularly encouraging is that HCL Tech is trading above its 20-day, 50-day, and 200-day moving averages. This alignment of the stock's price with multiple moving averages is a positive sign for investors, indicating a consistent and sustained uptrend.”

"Additionally, there's a small resistance level at 1575, which, if broken, could trigger further upward movement. This implies that the stock has the potential to push higher. The Relative Strength Index (RSI), at 75.29 and on an upward trajectory, suggests increasing buying activity. However, investors should exercise care and watch the stock if it falls below 1488, as this might negate the favourable outlook," Bagadia added.

On suggestion to stock market investors regarding HCL Tech shares after Q1FY25 results, Bagadia said, "We recommend buying HCL Tech shares at CMP of ₹1560.20 levels. It can also be added on dips near ₹1530 with a stop loss of ₹1488 for the target of ₹1680."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.