HCL Technologies share price hit a 52-week high on Tuesday after the company reported better than expected earnings for the second quarter of FY25. HCL Tech shares gained as much as 1.40% to a high of ₹1,882.00 apiece on the BSE.
HCL Technologies reported a net profit of ₹4,235 crore in Q2FY25, a marginal drop of 0.5% from ₹4,257 crore in the previous quarter. The company’s revenue rose 2.9% to ₹28,862 crore from ₹28,057 crore, quarter-on-quarter (QoQ). EBIT increased 11.8% to ₹5,362 crore from ₹4,795 crore, while EBITDA margin expanded by 150 bps to 18.6% from 17.1%, QoQ.
The IT major lifted its FY25 revenue growth guidance to 3.5% - 5% YoY in constant currency (CC) from 3% - 5% range. It has retained its EBIT margin guidance of 18% - 19% for FY25.
HCL Tech’s Q2FY25 revenue of $3,445 million in cc was ahead of the consensus estimate of 0.6% QoQ growth and Nomura’s estimates of 0.7% growth. All three service offerings reported QoQ cc growth with IT Services, ER&D Services and Products & Platforms growing 1.8%, 1.1% and 1.4%, respectively.
Most brokerages raised their target prices on HCL Technologies shares on the back of better than estimated Q2 results and FY25 revenue guidance upgrade.
Nomura expects USD revenue growth of 5.6% - 10.8% in FY25 / FY26F with EBIT margins of 18.3% - 19.0%. Strong growth in the products business can be a medium-term demand tailwind, in our view, Nomura said.
The foreign brokerage raised its FY25-26 EPS by 1% - 1.5% and HCL Tech share price target price to ₹2,000 from ₹1,900 based on a three-stage growth model. It has a ‘Buy’ rating on the stock.
Antique Stock Broking said that HCL Technologies reported a decent quarter, beating expectations across all key parameters.
“Given HCL Technologies’ broad based growth, balanced portfolio, and positive commentary on the demand environment witnessed, we believe that the company is well placed to deliver decent growth in the remaining part of the year as well. Its revised FY25 constant currency revenue growth forecast of 3.5%-5% is the second highest among large-cap peers,” Antique Stock broking said.
It maintained a ‘buy’ rating on HCL Technologies stock and increased the target price to ₹2,000 from ₹1,875 earlier.
“We roll over our valuation multiple to FY27 (from 1HFY27) and maintain the forward PE multiple of 25x which is in line with our target multiple for Infosys,” Antique said.
HCL Tech shares have been, by far, the best performing stock in the large-cap IT space. HCL Tech stock price has gained over 48% in one year.
“Its sharp re-rating has been driven by higher growth than peers and rectification of its capital allocation policy—fundamentals that shall sustain in FY25 too. It is currently trading at 26x FY26 PE – on a par with Infosys and TCS – versus historical discount of 15%–20%. We remain positive on HCL Technologies,” Nuvama said.
While HCL Technologies reported its Q2 results on October 14, Tata Consultancy Services (TCS), the largest IT services company in India, announced its earnings on October 10.
HCL Tech Q2 results beat Street estimates and raised its revenue guidance for FY25, while on the other hand, TCS Q2 results were muted, with weak operational performance and falling margins.
TCS delivered modest, but in-line Q2FY25 results. The IT behemoth reported a net profit of ₹11,909 crore, a drop of 1.1% from ₹12,040 crore in the previous quarter, while its revenue rose 2.6% QoQ to ₹64,259 crore.
Revenue came in at $7,670 million, up 1.1% CC QoQ, slightly below Street’s estimate of 1.3% CC QoQ growth. Deal flow remained soft at $8.6 billion, up 3.6% QoQ and down 23.2% YoY. TCS management remains optimistic about demand revival as they see a recovery in BFSI and bottoming out of the retail vertical.
EBIT was flat at ₹15,465 crore, while the operating profit margin narrowed by 60 bps to 24.1% from 24.7%, QoQ.
At 10:10 am, HCL Technologies shares were trading 0.15% higher at ₹1,858.80 apiece on the BSE.
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