Shares of IT heavyweights Tata Consultancy Services (TCS), Infosys, and Wipro rose on Friday as market sentiment was lifted by the robust earnings figures of peer HCL Technologies for the March quarter. HCL Technologies shares surged over 3% in opening trade as investors cheered better-than-expected results for the fourth quarter ended March 31, 2023. The overall information technology (IT) index witnessed a surge in buying, with index heavyweights Tata Consultancy Services (TCS), Infosys, and Wipro rising nearly 1% in opening deals. However, Tech Mahindra was down over 1%.
HCL Tech shares opened 1.6% higher at ₹1,052 against the previous closing price of ₹1,037.55 on the BSE. Extending opening gains, the largecap stock rose 3.5% to hit a high of ₹1,073.85, whereas the market capitalisation climbed to ₹2.86 lakh crore. The stock trades 7% lower than its 52-week high of ₹1,156.80 touched on February 3, 2023, while it is up 23% against its 52-week low of ₹875.65 hit on August 29, 2022.
At the current price, HCL Tech shares have delivered a negative return of 4% in the last one year, while it rose nearly 3% in the six month period. In the calendar year 2023, the IT heavyweight has risen 1.5%, whereas it fell 2.5% in a month. In the last one week, the counter has gained over 3%.
The BSE IT index has underperformed in the last two weeks after IT bellwethers TCS and Infosys reported dismal earnings in March quarter. The street was expecting another disappointment from HCL Tech, but the company surprised with its top and bottom line growth, which topped analysts’ estimate.
HCL Technologies on Thursday reported a consolidated net profit of ₹3,983 crore for the January-March quarter of 2022-23, recording a 10.8% rise as compared to ₹3,599 crore profit in the year-ago period. The revenue from operations surged 17.74% as compared to ₹22,597 crore during the same period last year.
Dollar revenues for the IT major stood at $3,235 million, down 0.3% sequentially and up 8.1% YoY. The constant currency revenue, however, dipped 1.2% on a quarter-on-quarter basis but surged 10.5% year-on-year.
HCL's EBIT stood at ₹4,836 crore in Q4FY23, which was 18.1% of its total revenue in Q4 FY23 and up 18.8% YoY.
For the January-March quarter, HCL Tech won 13 large deals, but the total contract value (new deal wins) for the quarter dropped 8% YoY to $2,074 million.
The Noida-headquartered software services firm has announced an interim dividend of ₹18 per share and record date for the same is April 28, 2023. The payment date of the said interim dividend is May 9, 2023. This is the 81st consecutive quarter of dividend pay-out by the company, while it declared an equity dividend of ₹48 per share in the past 12 months. HCL Tech has paid 85 dividends since its listing in 2000. At the current share price, the dividend yield stands at 4.63%.
“There was a mild miss in revenue, however, the profits came out a little better than expected aided by growth in other income. Overall, their revenue was down 0.3% QoQ, however, their services business grew 0.6% QoQ which is a positive. The guidance of 6-8% in CC for FY24 is good and so is the margin guidance of 18-19%. The deal wins have been stable above $2 bn and an increase in headcounts increases conviction on the sustainability of demand. Overall, the result has not been a shocker like its leading IT peers and thus the street would be appreciative of the same,” says Veer Trivedi, Research Analyst, SAMCO Securities.
