Moneycontrol BureauShares of IT major HCL Technology tanked over 10 percent in early trade on Thursday morning on a revenue warning by the company on Wednesday. The stock was quoting at Rs 881.00, down Rs 101.15, or 10.30 percent at 9:22 hours.
The company on Wednesday, post market hours, announced that its first quarter earnings may be hit on account of client-specific issue, cross currency impact and longer transition deadlines for some of its complex projects in infrastructure management services (IMS).
Broking firm Deutsche Bank cut its below consensus FY16E earnings estimates further by 5 percent and expects the company to deliver an EPS of INR 50.7 (8 percent below consensus). It has reiterated a sell call with a target price of Rs 675.
Broking firm Goldman Sachs has said it would review its earnings estimates, target price and rating on the stock pending further clarity.
"We do not view the skewness in complex IMS contracts as an indicator of weak revenue growth in IMS on an annual basis as elongated transition of some contracts is a timing issue and would mean revenues would be recognized with a delay. We witnessed this in 2014 as well when weaker growth in 2Q was followed by strong growth in 3Q," the Goldman Sachs note said.
At the same time time, this was the first time in the past many years that HCL highlighted a client-specific execution issue, especially when its superior execution in the past few years resulted in sector-leading growth, the Goldman Sachs note said.(Posted by Ritika Dange)
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