Shares of HCL Technologies Ltd. declined after its first-quarter profit missed analysts' estimates.
The company's net profit fell 11.3% sequentially in the quarter ended June to Rs 3,531 crore, according to an exchange filing on Wednesday. That compares with the Rs 3,830 crore consensus estimate of analysts tracked by Bloomberg.
The company guided for revenue growth of 6–8% in constant currency terms in fiscal 2024, with a margin in the range of 18–19%. It also guided for service revenue to grow at 6.5–8.5% in constant currency terms in the current fiscal.
Additionally, the company announced late Wednesday that it will acquire German automotive engineering company ASAP Group for 251 million euro.
HCL Tech Q1 FY24 (Consolidated, QoQ)
Revenue down 1.2% at Rs 26,296 crore. (Bloomberg estimate: Rs 26,884 crore).
EBIT fell 8.2% to Rs 4,438 crore. (Bloomberg estimate: Rs 5,934 crore).
EBIT margin: 16.9% versus 18.2% (Bloomberg estimate: 22.1%)
Net profit fell 11.3% to Rs 3,531 crore. (Bloomberg estimate: Rs 3,830 crore).
Here's what the brokerages say about the company's Q1 results:
Citi
Investors are worried about the guidance process and revenue
visibility given the sharp deviation against expectations in the first quarter.“We expect the stock to be under pressure in the near term,” analyst Surendra Goyal said in the note.
The weak results and the guidance will likely result in downgrades and a derating, Goyal says.
Jefferies
The first quarter's performance is a reminder that IT firms can spring
“unexpected negative surprises” when going through an
“uncertain” demand phase, analysts Akshat Agarwal said in the note.“While the recent correction in the stock and 4.5% dividend
yield limit downsides, upsides are capped as well,” Agarwal says
in a note
Shares of the company fell 0.21% to Rs 1,108.20 apiece as of 10:19 a.m., compared to a 0.87% rise in the NSE Nifty 50. The scrip declined as much as 2.12%.
The total traded volume so far in the day stood at 13.2 times its 30-day average. The relative strength index was at 36.
Out of the 45 analysts tracking the company, 25 maintain a 'buy' rating, 15 recommend a 'hold', and five suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies a potential upside of 7.3%.
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