HCL Tech shares jump on robust Q4; analysts maintain ‘buy’ call

Shares of HCL Technologies rose over 3% on Friday after the IT major reported robust earnings for the fourth quarter ended March 31, 2022. The company has also declared a dividend of ₹18 per equity share for the financial year 2021-22. Most analysts have maintained their "buy" calls on HCL Technologies, citing healthy order bookings, dividend payout, and reasonable valuation.

Following Q4 results, HCL Tech shares opened lower at ₹1,090 against the previous closing price of ₹1,099.60 on the BSE, in line with the broader market. Reversing opening losses, the stock gained as much as 3.2% to hit an intraday high of 1,t135, driven by a surge in buying activities. In contrast, the BSE Sensex was trading at 57,636, down 275 points, or 0.48%.

On the volume front, as much as 3.3 lakh shares worth ₹36.92 crore changed hands over the counter as compared to two-week average volume of 2.54 lakh scrip. The market capitalisation of the company increased to ₹3.01 lakh crore.

As per the share price history of HCL Tech, the stock has delivered a muted return of 15% to its shareholders in the past one year in comparison to 20% growth in the BSE benchmark Sensex. The stock has dropped 7% in the last six months and 16% since the beginning of the calendar year 2022 (year-to-date basis). The stock touched its 52-week high of ₹1,377 on September 24, 2021, and 52-week low of ₹891.25 on May 3, 2021.

Here’s what analysts say on Q4 results

HCL Tech’s consolidated profit after tax (PAT) grew by 226% to ₹3,593 crore in Q4 FY22, compared to ₹1,102 crore in the corresponding quarter a year ago. Sequentially, the profit rose by 4.4% from ₹3,442 crore in the December quarter of 2021.

The Noida-based company saw its consolidated revenue rising by 15% to ₹22,597 crore in Q4 FY22, as against ₹19,642 crore in the year-ago period. On a quarter-on-quarter basis, revenues inched up 1.2% from ₹22,331 crore in Q3 FY22.

Following Q4 earnings, analysts at Sharekhan have maintained a 'buy' call on HCL Technologies, with an upgraded target price of ₹1,400, citing higher dividend payout, healthy order booking 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.

YES Securities has also affirmed a 'buy' call, citing that deal booking remains strong and valuation remains attractive. The agency in its report said that HCL Tech’s earnings were lower-than-expected, with both revenue and EBIT margin falling below expectation. “Weak Q4 seasonality for Platform and Product impacted the performance. The IT services segment continues to report robust growth (5.2% QoQ),” it said.

“Overall, the financial performance was below expectation due to volatility in the Products and Platforms (P&P) segment. However, the IT services segment continues to deliver among industry leading growth,” it added.

Meanwhile, analysts at ICICI Securities have maintained a “hold” rating, with a target price of ₹1,099 per share.