HCL Technologies shares hit record high, overbought on charts; can they hit Rs 2,000 mark?

Shares of HCL Technologies hit their record high amid a rally in the IT sector stocks today. HCL Technologies shares rose 3.5% to a record high of Rs 1,812 on BSE. Market cap of the firm stood at Rs 4.90 lakh crore. Later, the stock ended 3.13% higher at Rs 1807.05. The stock is overbought on charts indicates its relative strength index (RSI) at 73. The stock is trading above all its short term and long term moving averages. On similar lines, the Nifty IT index surged 187 points to 42,975. 

Earlier, Nifty IT index almost hit 43,300, up 513 pts intra day against the previous close of 42,787. 

Brokerage Motilal Oswal has a buy call with a price target of Rs 2,000

"HCL Tech go-to-market (GTM) strategy, which combines its IT Services and ER&D business offerings, gives it an edge over its peers. There are signs of improvement in the demand environment in financial services. HCL Tech will most likely outperform its peers on growth. Further, its free cash flow metrics have meaningfully improved recently and are now comparable to both TCS and Infosys," said Motilal Oswal. 

It believes HCL Tech's current performance warrants a multiple premium to Infosys.

Antique Broking has raised its price target to Rs 1,850 against the earlier Rs 1,750. 

"Over the decade, it has transformed its offerings into more of an all-weather portfolio from being largely an infra and ER&D play to a right mix of discretionary & nondiscretionary services and IP business with all digital business build organically," said the brokerage. 

The brokerage raised its FY27 growth and margin assumption marginally while also raising multiple to 25x (from 24x) on 1HFY27 EPS due to improved medium-term growth outlook.

The valuation target multiple is similar to Infosys, while it is at a 10% discount to TCS, said Antique 
Broking. 

In a recently held analyst meet, HCL Tech said it sees opportunities in the areas of: 

1) Data and AI expected to grow at 19% CAGR;

2) SAP cloud platform services market expected to grow at 26% CAGR;

3) Cloud migration to accelerate with 70% workload shifting to cloud by 2029 (versus 25% currently);

4) ER&D market is expected to grow at 8%-9% led by telecom, semiconductor, and auto;

5) BFSI and TMT spend accounts for about 43% of the total global tech spends and HCLT's strong presence in these verticals positions it well to continue growing.