HCL Tech shares climb 4%; CLSA maintains buy call, raises target price by 14%

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26 Aug, 2025 12:21

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Shares of HCL Technologies appeared to have shrugged off the Q1 earnings disappointment as the stock climbed 4.01 percent to close at Rs 648.45 on BSE on July 20.

The company on July 17 reported a 7.3 percent quarter-on-quarter (QoQ) fall in its June quarter net profit at Rs 2,925 crore, following which the stock closed with a mild loss of 0.67 percent on BSE.

Read more: HCL Tech Q1 profit falls to Rs 2,925 crore; Shiv Nadar steps down as chairman

However, the results did not disappoint global brokerage firm CLSA which maintained a 'buy' call on the stock and raised the target price by 13.85 percent to Rs 740 from Rs 650.

As per CNBC-TV18, CLSA is of the view that the company's results underscored its strong margin defence.

"Higher exposure to run-the-business spend leading to a faster recovery. We raise FY21 and FY22 EPS estimates by 4 percent and 6 percent, respectively.

Domestic brokerage firm Motilal Oswal Financial Services, too, has maintained a 'buy' call on the stock with a target price of Rs 765.

"We upgrade our FY21/FY22E EPS by 12–14 percent and maintain a 'buy', as we expect HCL Tech to better navigate the current crisis and emerge stronger on the back of an expected increase in enterprise demand for digital services," said Motilal Oswal.

"Our confidence partly stems from the company’s historical track record of adapting to multiple business challenges and technology change cycles. The stock is currently trading at a modest nearly 12 times on FY22E earnings and offers a superior margin of safety. Our target price is based on about 15 times FY22E EPS," Motilal said.

Motilal Oswal highlighted that HCL Tech’s exposure to deeply troubled verticals, such as energy, travel, transportation, hospitality and retail, is lower against peers.

"Additionally, higher exposure to IMS (nearly 37 percent of revenue), comprising a larger share of nondiscretionary spend, offers better resilience to its portfolio in the current context. Besides this, the company has a higher exposure to financial services, technology services and manufacturing, wherein we anticipate an uptick in IT spends in the post-COVID-19 era," Motilal said.

However, the company’s high exposure to ER&D (nearly 16 percent of revenue) is a key monitorable and Motilal Oswal is cautious about this segment due to the discretionary nature of projects and supply-side challenges.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.