Shares of HCL Tech fell over 4 percent on Friday after the IT firm reported its September quarter earnings. The IT major reported a 7.4 percent rise in net profit for at Rs 3,142 crore for the September quarter as against Rs 2,925 crore in the previous quarter. The net profit beat CNBC-TV18 analysts' poll estimates of Rs 3,046 crore.
The stock lost as much as 4.4 percent to Rs 821 per share. It has fallen 8 percent in the past two trading days and is down 10 percent from its 52-week high of Rs 910.75, hit earlier this week on October 14.
Its revenue grew 4.2 percent to Rs 18,594 crore in the quarter under review, from Rs 17,841 crore in June 2020 quarter. Meanwhile, the dollar revenue growth stood at 6.4 percent at $2,507 million and the company posted constant currency revenue growth at 4.5 percent.
The company has maintained its revenue growth guidance of an average of 1.5-2.5 percent increase quarter-on-quarter in constant currency for the third and fourth quarter.
The board of directors has declared an interim dividend of Rs 4 per equity share for the financial year 2020-21.
Despite the stock fall, brokerages seem to be in favour of the stock. Motilal Oswal, in a recent report, mentioned that it likes HCL Tech given its robust business model, high return ratios, strong management team, and reasonable valuation.
"We expect HCL Tech to better navigate the current crisis and emerge stronger due to an expected increase in enterprise demand for Digital Services. Our confidence partly stems from the company’s historical track record of adapting to multiple business challenges and technology change
cycles," it added.
It further noted that HCL Tech’s exposure to deeply troubled verticals
(like Energy, Travel, Transportation, Hospitality, Retail, etc.) is lower as compared to peers. Adding that higher exposure to Information Management Systems (IMS) which comprises a larger share of its non-discretionary spending, offers better resilience to its portfolio in the current context.
Also, the company has a higher exposure to Financial Services, Technology Services and Manufacturing where an uptick in IT spends is expected in a post-COVID-19 world, further stated the brokerage.
(Edited by : Ajay Vaishnav)