August 11 has turned out to be the best day for shareholders of HCL Technologies in the last 14 months with the intraday gains scaling a high of Rs 1,186.95, a day after it announced a deal with Verizon Business.
HCL Technologies on August 10 announced signing a $2.1-billion deal with the US telecom major. Through the strategic global partnership, HCL Tech will become the primary managed network services (MNS) collaborator for Verizon Business in all networking deployments for global enterprise customers.
According to a statement from the company, the partnership which combines “Verizon’s networking power, solutioning, and scale with HCL Technologies' market leading managed service capabilities” will help usher in a new era of large-scale wireline service delivery for enterprise customers.
At 9.56am, shares of HCL Tech were trading nearly 3 percent higher at Rs 1,166.90 on the National Stock Exchange. The stock was also the top gainer on the Nifty 50.
Trading volumes were also higher as 33 lakh shares changed hands on the exchanges, higher than the one-month daily traded average of 32 lakh shares.
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While the Noida-based global technology services major will take a lead on post-sale implementation and ongoing support, Verizon will lead all customer acquisitions, sales, solutioning, and overall planning and development with its customers.
In a regulatory filing, HCL Technologies said that it expects "the deal to have a positive revenue impact over the next six years" beginning in November 2023. Deal wins for the technology major stood at $1.56 billion as of the April-June quarter, a significant drop from its $2 billion plus order book in the previous seven quarters.
According to analysts at Morgan Stanley, the deal announcement could lower the perceived risk of a potential cut in revenue guidance at the lower end. They also expect some of the underperformance to reverse as a result of the announcement.
Also Read | HCLTech bags $2.1-billion deal from Verizon, shares up
HCL Technologies put up subdued earnings for the June quarter, aligned with the overall slowdown in the IT sector. While the company reported a 7.6 percent on-year growth in net profit for the June quarter, sequentially, the bottomline was down 11.2 percent to Rs 3,534 crore. Consolidated revenue for the quarter grew 12 percent on-year to Rs 26,296 crore.
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