On Monday, Investec retained its Sell rating on HCL Technologies (HCLT:IN), while slightly raising the price target to INR1,312 from INR1,300. The adjustment follows HCL Technologies' recent financial performance, which was in line with expectations in terms of revenue and EBIT percentage.
The company's revenue saw a quarter-over-quarter decrease of 1.9%, with EBIT percentage also falling by approximately 50 basis points to 17.1%.
The company anticipates growth across various verticals and geographies in the second quarter of the fiscal year 2025, with the exception of the Banking, Financial Services, and Insurance (BFSI) sector. This sector is expected to be affected by HCL Technologies' exit from the State Street (NYSE:STT) joint venture, an event predicted to create a 0.8% headwind on revenue.
Investec has expressed a view that HCL Technologies' EBIT percentage for the year will likely align closer to 18%, as opposed to the consensus estimates of 18.4%. This discrepancy could result in some downward adjustments to earnings forecasts.
Despite this, the firm foresees no significant changes to its estimates, except for the fiscal year 2025, which has been increased by 2.3%. This revision is attributed to higher other income in the current quarter, stemming from gains related to the exit from the State Street joint venture.
The valuation has been rolled over to the second quarter of the fiscal year 2027 on a trailing twelve months basis. Investec's reiteration of the Sell rating with a new target price of INR1,312 reflects a cautious stance on the stock's future performance.
In other recent news, HCL Technologies experienced a series of changes in analyst ratings and price targets. Bernstein raised its target to INR1,520, maintaining a Market Perform rating, while UBS reiterated a Neutral stance with a target of INR1,500. Morgan Stanley kept an Overweight rating, increasing the target to INR1,705. However, CLSA downgraded the company from 'Outperform' to 'Hold,' adjusting the price target to INR 1,556.
HCL Technologies reported a first-quarter revenue of $3,364 million for the fiscal year 2025, marking a 5.6% increase year-over-year but a 1.9% decrease quarter-over-quarter. The company's EBIT margin remained steady at 17.1%, aligning with consensus estimates. Despite the revenue decrease, the firm's management maintained its fiscal year 2025 revenue growth forecast of 3-5% year-over-year in constant currency and margin guidance of 18-19%.
These developments come in the wake of HCL Technologies' recent financial performance, which showed a slight decline in quarterly revenue. Yet, the firm's Products & Platforms segment remained stable, and the Total Contract Value (TCV) of net new deals for the first quarter was reported to be stable at $1.9 billion. These are some of the recent developments for HCL Technologies.
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