The share price of the IT company which deals in the business of integrated portfolio of services which includes software-led IT solutions, engineering and R&D services, and BPO in India was down by 9.6 percent on Tuesday which is due to quarterly result announcements and special dividend.
Share Price Movement
In Tuesday’s trading session, HCL Technologies Ltd’s share price touched a day’s low of Rs. 1,797.75 which was down by 9.6 percent. The share price reiterated from the day’s low and was trading at Rs. 1,824.40 which is 8.29 percent lower than the previous closing price of Rs. 1,989.40. In the past year, the stock has delivered around 14.78 percent and has outperformed the Nifty Index in the past year.
What Happened
The company’s stock was in focus after it released its quarterly financials and announced a dividend and special dividend.
In its latest filing for the quarter ending December 2024, the company reported a 5.07 percent rise in revenue, reaching Rs.29,890 crore compared to Rs.28,446 crore in Q3 FY24. On a quarter-over-quarter basis, the operational revenue rose by 3.56 percent from Rs.28,862 crore in Q2FY25.
During the same period, net profit increased by 5.58 percent to Rs.4,594 crore in Q3FY25, compared to Rs.4,351 crore in Q3FY24, and increased by 8.42 percent from Rs.4,237 crore in Q2FY25.
Regarding return ratios, the return on equity (ROE) stands at around 23.51 percent. The Net profit margin for FY24 stood at 14.29 percent. The stock is trading at a P/E (Price to Earnings) ratio of around 32.02, which is lower than the industry average of 35.36. The company also boasts a strong current ratio of 2.28 and a debt-to-equity ratio of 0.08.
In Q3FY25, the company’s revenue from IT and Business Services contributed around 72.94 percent, Engineering and R&D services contributed around 16.05 percent, and the remaining 11 percent from HCL Software. The new deal bookings in the Q3FY25 stood at $2.1 billion across services and software. The guidance for FY25 was set at 4.5 to 5 percent (constant currency) and EBIT margin guidance at 18 to 19 percent.
Management Commentary
HCL Technologies CEO and Managing Director C Vijaykumar said “I am pleased that our growth is powered by broad-based performance across business lines as our clients across verticals and geos reaffirm their confidence in our Digital and AI offerings. We continue to see growing demand for our AI-led propositions across services and software offerings”.
Dividend Announcements
On January 13th, 2024, The company announced a 4th interim dividend on the face value of Rs. 2 per share, constituting Rs. 12 per share. Additionally, they announced a Special Dividend of Rs. 6 per equity share. The total dividend will amount to Rs. 18 per share. The record date is fixed on 17th January 2025. The payment date for the said interim dividend will be on 24th January 2025.
Collaboration with Microsoft & partnering with Vi
The company announced a strategic partnership with Microsoft aimed to transform contact centers with generative AI and cloud-based solutions. Further, HCL Tech has partnered with Vodafone Idea to automate 4G and 5G Networks using HCL Augmented Network Automation to optimize and improve network performance and offer better services to customers.
Brokerage Target
Jefferies, a global reputed brokerage firm has covered the stock and assigned a rating. The brokerage firm kept a ‘Hold’ rating with a target price of Rs. 2,060 per share and expressed concerns about revenue falling below estimates and from the guidance of the broker signalling a weak Q4 result outlook.
Company Profile
HCL Technologies Limited was founded in 1991 and is headquartered in Noida. It is one of the leading global IT services providers. They specialize in IT and business services, engineering and R&D services, and products and platforms. Their business model focuses on delivering a wide range of solutions, including cloud services, cybersecurity, and digital transformation, to diverse industries such as finance, healthcare, and manufacturing.
Written by – Santhosh S
