HCL Technologies shares fall 2% after Q3 results; should you buy, hold or sell?

Shares of HCL Technologies declined on Tuesday despite the IT major raising its full-year revenue growth guidance. The stock may have reacted to the reported dip in net profit, which was weighed down by one-time exceptional costs.

On Tuesday, shares of HCL Tech declined as much as 2.50% to touch the day’s low of Rs 1,626.40 against its previous close of Rs 1,668.10 apiece on the BSE.

Axis Direct has upgraded the stock from a 'Hold' to a ‘Buy’ rating, revising its target price upwards to Rs 1,880 from Rs 1,630. The brokerage highlighted the company's inline performance regarding revenue and EBIT margins, though it noted the PAT miss was led by exceptional costs.

The firm remains optimistic about HCL Tech's deal trajectory. "The company reported a robust net new booking performance of $3 Bn for the quarter, 17% growth QoQ," Axis Direct said. Axis believe HCL will start commencing a better recovery post-restructuring initiatives and AI implementation across its verticals.

JM Financial retained its ‘Add’ rating on the stock, raising the target price to Rs 1,770 from Rs 1,730.

"HCLT’s 3Q performance reinforced execution strength," said JM Financial said. JM Financial said that while the reported PAT was impacted, the EBIT margins surprised at 18.6%, aided by software profitability, despite wage hikes, furloughs and restructuring costs. 

Choice Broking recommended an ‘Add’ rating with a revised target price of Rs 1,800. The brokerage stated that the Q3 results were above expectations, particularly praising the "strong growth in revenue & EBIT."

Choice highlighted the robust demand environment, noting that "HCL Tech delivered a strong, broad-based performance driven by momentum in AI-powered solutions and large-scale transformation programs." They added that the "deal pipeline remains healthy and well-diversified across geographies and verticals."

The HCL Tech board also declared an interim dividend of Rs 12 per share.