HCL Tech beats Q4 estimates with over 10% profit: Check out what brokerages have to say

Here is what brokerages have to say about stock and the company post March quarter earnings:

Nomura

Nomura has given a 'neutral' rating to the stock and has cut its target price to Rs 1,100 per share. The Q4FY23 results were broadly in line, while FY24 guidance reflects a challenging macro environment.

Nomura has lowered its EPS estimates for FY24-25 by 4 percent, citing expectations of lower revenue and margins, as well as higher tax rates.

Macquarie

The broking house has kept 'outperform' rating with a target price of Rs 1,580. The report suggests that the company is a growth leader compared to its peers, based on its guidance.

The rupee revenue was 1 percent below estimates, but the management has reiterated its medium-term EBIT margin target of 19-20 percent. The company's service revenue guidance of 6.5-8.5 percent for FY24 implies a higher revenue growth than Infosys.

JPMorgan

JPMorgan has kept 'underweight' rating on the stock and lowered its target price from Rs 920 to Rs 880. The Q4 services business was a miss due to discretionary spending cuts. The project ramp downs, and deferrals, which also led to a miss on its FY23 CC guidance.

The report notes that telecom, manufacturing, and high-tech segments were stressed, but a frontier market BFSI deal ramp drove uncharacteristic strength.

FY24 CC guidance at 6-8 percent and 6.5-8.5 percent in services is weak and guidance is 200 bps below consensus and largely in line with the JPMorgan estimates. It has cut its revenue estimate by 1% and margin estimate by 20/30 bps, which drives a 3 percent/5 percent EPS cut over FY24/25.

Morgan Stanley

Foreign research firm Morgan Stanley has maintained 'Overweight' rating with a target price of Rs 1,160. The company's core services performance in Q4 missed the expectations. The FY24 revenue guidance also appears to be aggressive given the macro conditions and weak FY23 ACV growth.

The firm lowers its EPS estimates by 2-3 percent.

Jefferies

Jefferies has kept 'hold' rating on the stock and set a target price of Rs 1,125. The Q4 results did not spring any major negative surprises, although the decline in ER&D revenue was disappointing. However, growth in BFSI and North America surprised positively.

The report highlights that the FY24 guidance of 6-8 percent growth and 18-19 percent margin was in line with expectations. However, the report has cut its estimates by 2 percent on a higher tax rate and expects a 10 percent EPS CAGR over FY23-25.

At 17x PE, the company offers a 5 percent yield, which should limit further de-rating.

Sharekhan

Although the outlook for FY24 is uncertain in the near term owing to challenging macro environment, the resilient model, diverse portfolio mix, strong client additions, a strong deal pipeline and decent hiring makes HCL Tech well placed to navigate the uncertainty.

HCL Tech is trading at a discount to its peers and considering reasonable valuations, we maintain Buy rating on the stock with a revised price target of Rs 1175. At CMP, the stock trades at the stock trades at 18.7x its FY2024 EPS and 16.9 its FY2025 EPS.

At 09:22 hrs HCL Technologies was quoting at Rs 1,051.45, up Rs 13.90, or 1.34 percent on the BSE.

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