Share of HCL Tech declined 3 per cent to hit an intraday low of Rs 970.30 on BSE after the company reported weaker than expected results for the quarter ended June (Q1FY22).
The stock opened 0.9 per cent lower at Rs 991.00 against the previous close of Rs 1,000.20. Market cap of the firm fell to Rs 2,63,673.27 crore. The share stands higher than 50 day, 100 day, 200 day moving averages and lower than 5 day, 10 day, 20 day moving averages.
The IT major reported a 9.4 per cent increase in net profit on a year-on-year basis at Rs 3,213 crore compared to Rs 2,935 crore in the year-ago period. Revenue from operations stood at Rs 20,068 crore as against Rs 17,842 crore in Q1 FY21.
EBITDA (income with interest, taxes, depreciation, and amortisation) for Q1 FY22 stood at Rs 4,908 crore, a 12.5% growth on a YoY basis, while EBIT (earnings before interest and taxes) has been recorded at Rs 3,931 crore, a 7.4 per cent rise on a YoY basis.
HCL Tech said it expects revenue to grow in double digits in constant currency for FY'22. EBIT margin is expected to be between 19 per cent and 21 per cent for the financial year.
"I believe that the experiences of the pandemic will foster greater adaptability and a spirit of innovation. Aided by the accelerated adoption of technology and leveraging the tenacity of people, the world will emerge as a better place. At HCL, we believe in purpose-driven growth, unifying social responsibility with our business goals," said Shiv Nadar, Chief Strategy Officer, HCL Technologies.
According to MarketsMojo, the company has a strong long term fundamental strength with an average Return on Equity (ROE) of 22.94%. The technical trend has improved from Mildly Bullish on July 14, 2021, and the stock is technically in a Bullish range now. Multiple factors for the stock are Bullish like MACD, Bollinger Band and KST. It also noted that the stock is trading at a fair value compared to its average historical valuations.
Motilal Oswal has reduced the margin estimate to factor in higher sales and marketing investments in FY22E. "We maintain our 'Buy' rating as we expect traction in the Services business in 2HFY22E and FY23E, driven by higher IMS/Cloud-focused deals. Our target of Rs 1,180 per share implies 20x FY23E EPS," the brokerage house said.
CLSA believes that the company's revenue was a miss due to transient factors. It expects momentum to come back strongly in Q2 and has a 'Buy' rating on the stock with a target price of Rs 1,180 per share.
HCL Technologies also informed that its founder Shiv Nadar has stepped down as the Managing Director of the company and has been appointed Chairman Emeritus and Strategic Advisor to the company's board. Nadar, who was the MD and Chief Strategy Officer, tendered his resignation with effect from the close of business hours on July 19, as mentioned in a regulatory filing
The company has declared a dividend of Rs 6 per share, and it's the 74th consecutive quarter of dividend pay-out by the tech services company.
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