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Brokerages expect IT stocks to continue trading at premium valuations given the order pipeline and digitalisation. Infosys, Tech Mahindra and HCL Technologies are the top consensuses picks.
The company paid a one-time bonus to employees in 4QFY21 amounting to around USD 100 million.
HCL Technologies shares gained around 2 percent so far in 2021 underperforming Nifty50 (up 2.8 percent) and Nifty IT index (up 6.7 percent).
Net Sales are expected to increase by 1.4 percent Q-o-Q (up 5.3 percent Y-o-Y) to Rs 19,566.4 crore, according to KRChoksey.
Net Sales are expected to decrease by 6.4 percent Q-o-Q (up 18.2 percent Y-o-Y) to Rs 3,726.8 crore, according to Prabhudas Lilladher.
Net Sales are expected to increase by 1.8 percent Q-o-Q (up 5.7 percent Y-o-Y) to Rs 19,650 crore, according to Motilal Oswal.
C Vijayakumar is confident that in the next five years, the industry’s growth will outpace its growth in the past five years. The IT services sector can definitely record double-digit growth, said the HCL Tech CEO
CFO Prateek Aggarwal said that at the back of the COVID-19 pandemic, enterprises across the board are accelerating their technology adoption and this process will take years to be completely digital.
The current annual guidance stands at 0.5-1.3 percent for revenue growth and 20-21 percent for EBIT margin band.
The deal pipeline is strong across companies led by digital foundation deals, integrated deals from smaller clients, experience transformation and even core transformation deals.
Given the fear of second wave of lockdowns, brokerages feel HCL Tech may avoid giving full-year guidance.
Net Sales are expected to decrease by 3.9 percent Q-o-Q (up 8.7 percent Y-o-Y) to Rs. 17,861.8 crore, according to Motilal Oswal.
Brokerages say the demand pullback is expected to be severe in the directly impacted segments but BFSI and telecom could be stable in terms of growth for IT companies.
Within tier-I IT companies, HCL Tech would lead the pack in terms of revenue growth given lower exposure to the impacted verticals, Sharekhan said.
The company closed the Sankalp acquisition to enhance leadership in the Semiconductors and Industrial IoT spaces.
Credit Suisse maintained outperform call on the stock and raised price target to Rs 700 (from Rs 665) as it feels Q3 was an all-round beat with yet another guidance raise.
Brokerage firm Edelweiss Securities expects an 11.3 percent year-on-year (YoY) rise in core PAT in HCL Tech's Q3FY20 at Rs 2,922.9 crore.
We expect Nifty EPS to grow by 14 percent for FY20 and clock in an EPS figure of Rs 554 for FY20.
Key things to watch out for would be increase in deal sizes & tenures in digital; demand commentary, specifically BFSI & retail; and commentary on the improving geopolitical scenario.
Net Sales are expected to increase by 4.5 percent Q-o-Q (up 16.7 percent Y-o-Y) to Rs. 18,324.9 crore, according to Motilal Oswal.
The software company is likely to retain its full-year revenue growth guidance at 14-16 percent (8-10 percent organic) and margin at 18.5-19.5 percent
Net Sales are expected to increase by 7 percent Q-o-Q (up 18.3 percent Y-o-Y) to Rs. 17,582.4 crore, according to Prabhudas Lilladher.
Net Sales are expected to increase by 7.6 percent Q-o-Q (up 18.9 percent Y-o-Y) to Rs. 17,668.6 crore, according to Motilal Oswal.
At an operating level, earnings before interest and tax may decline more than 6 percent, and its margin may contract sequentially by triple digits.