Shares of HCL Technologies slipped 1 percent to Rs 1,320 per share on December 5 after its UK-arm is set to offload entire 49 percent stake in US-based State Street joint venture (JV).
In the past three months, the stock of this IT major jumped 8.5 percent as against 5 percent rise in the benchmark Sensex.
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HCL Tech Investments UK, the step-down wholly-owned subsidiary of HCL Tech signed a memorandum of understanding (MoU) with its joint venture partner State Street International Holdings for selling entire 49 percent stake in the JV to State Street for $170 million plus net book value.
Analysts at Morgan Stanley shared an 'overweight' rating with a target price of Rs 1,400 per share. "The transaction is expected to complete by second quarter of fiscal year 2023-24 (Q2FY24) or Q1FY25. State Street has a revenue base of $97 million and net worth of $94 million. State Street would own 49 percent of voting rights in the JV and 100 percent of dividend rights," the brokerage firm said.
Nomura, however, shared a 'neutral' call on HCL Tech post this deal, with a target price of Rs 1,200 per share. They believe that HCL Tech would lose $97 million of revenues or 80 basis points (bps) of its current revenues post this divesture.
"As part of this divesture, HCL Tech would receive $170 million plus net book value on date of closing. The arrangement is expected to be effective from Q1FY25 onwards," analysts added.
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State Street Corporation is a US-based financial services provider to institutional investors including investment servicing, investment management and investment research and trading.
"Bringing the State Street HCL Services capabilities and expertise in-house will create a more simplified model to facilitate faster decision making and a more effective and efficient experience for its clients," HCL Tech said in an exchange filing dated December 4, 2023.
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