HCL Technologies Shares Decline On Guidance Concerns


Shares of HCL Technologies Ltd. eased after the company revised its growth guidance for the current fiscal.

After the second quarter earnings, the company raised its revenue growth guidance for the financial year 2022–23 from 12–14% to 13.5–14.5% but expected the final turnover at the lower end of the guidance. HCL Technologies, at its ongoing U.S. investor day, reiterated that the company will stick to the lower end of the forecast.

Shares of the company were down 6.61% as of 11:31 a.m. compared to a 0.30% decline in the benchmark Nifty 50. The stock was trading at 7.4 times its 30-day average volume.

Of the 47 analysts tracking the stock, 32 have maintained a ‘buy’ rating on the stock, 12 suggested to ‘hold,’ and three are of the view to ‘sell’ the stock, according to Bloomberg data.

The brokerage has assigned a ‘sell’ rating to HCL Technologies with a target price of Rs 842, implying a downside of 23.5%.

The commentary from the IT majors points to a weaker-than-expected October to December quarter, the brokerage said.

“HCL Tech has indicated that growth for FY23 will come at the lower end of the range that it had indicated post its Q2FY23 results due to higher-than-expected furloughs, highlighting BFSI and Hi-Tech as problem areas,” Nirmal Bang said. “We do expect this to be an industry-wide problem and not an HCL Tech-specific one.”

Macro headwinds from the U.S. could drive a 10–27% valuation-led correction in the Indian IT services sector, says Credit Suisse in its report.

The brokerage assigned a ‘neutral; rating to the scrip, implying that the stock’s total return is expected to be in line with the benchmark over the next 12 months. The stock’s price target was Rs 1,028.74.

The brokerage maintained a ‘buy’ rating on HCL Technologies as they expect consistent, industry-matching growth from the company. They set a price target of Rs 1,250 for the stock.

HCL Tech said during its analyst meeting that the macro impact on discretionary spending and furloughs has been higher than anticipated and the bookings trend is robust, according to Kotak Institutional Equities.


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