HCL Tech shares gain 2% post Q4 results; here's what brokerages say

Shares of HCL Tech were trading 2 per cent higher in early trade on Friday after the company reported its earnings for the quarter ended March 2022. 

On Thursday, the stock closed 0.92 per cent higher at Rs 1,099.60 on BSE. Market cap of the firm rose to Rs 2,98,394.61 crore.

HCL Tech reported a jump of 226 per cent year-on-year in its consolidated net profit at Rs 3,593 crore for the quarter ended 31 March, 2022 mostly on strong booking performance and growth across verticals. The company had posted a net profit of Rs 1,102 crore in the year-ago period.

However, due to the impact of deferred tax credit and the one-time milestone bonus paid during Q4FY21, the adjusted net profit during the same period last fiscal stood at Rs 2,962 crore.

Sequentially, the company's net profit saw a growth of 4.3 per cent in Q4FY22 from Rs 3,442 crore in the previous December quarter (Q3FY22). Revenue from operations also grew 15 per cent YoY to Rs 22,597 crore for the fourth quarter as against Rs 19,641 crore in the same quarter last fiscal.

Brokerage house Motilal Oswal expects HCL Tech to deliver EBIT at the lower end of its guidance, before recovering in FY24.

"We are encouraged by the continued strong performance in Services and expect HCLT to outgrow its largecap peers in 1QFY23. Visibility in the P&P vertical continues to elude the company and should hamper growth in the near term as it shifts to a subscription-based SaaS model from an on premise one. We maintain our Buy rating with a target price of Rs 1,310 per share," it added.

Sharekhan has maintained a 'Buy' on HCL Technologies with a revised target price of Rs 1,400, given strength in the services business, higher dividend payout, healthy order intake and reasonable valuation.

"Q4FY22 revenue growth was modest as revenues of product business fell sharply, but profitability remained in line with expectations. Order bookings, robust hiring, client additions, dividend payout and cash flow conversion remained impressive," it said.

Jefferies has cut EPS estimates to 6-7 per cent on higher tax rates and margin guidance. The brokerage house has maintained a 'Buy' rating on the stock with a target price of Rs 1,360 per share. It added that the company's growth guidance for FY23 of 12-14 percent was the key positive from Q4 results.

The board of the company has also declared an interim dividend of Rs 18 per equity share of Rs 2 each for the financial year 2022-23. The record date of April 29, 2022 fixed for the payment of the aforesaid interim dividend has been confirmed by the board. The payment date of the said interim dividend shall be May 11, 2022.