Shares of HCL Technologies hit a lifetime high on Tuesday following its Q2 results. The company on Monday reported 10.51 per cent y-o-y growth in its consolidated net profit ₹4,235 crore for the second quarter that ended on September 30, 2024, against ₹3,832 crore in the corresponding period last year. A majority of brokerages have been positive on the stock.

HCL Technologies has been a top pick by brokerages among large-cap IT companies.

Nuvama Institutional Equities marked that HCL Tech has reported strong Q2 results, beating its estimates. The company “delivered strong broad-based growth across verticals and managed to maintain flattish revenue in BFSI despite divestment, resulting in an upward revision of the lower end of its revenue guidance,” it said.

Motilal Oswal has reiterated ‘buy’ call on HCL Tech at a target price of ₹2,300 apiece. According to the brokerage, the company is best positioned to play the short-term slow, medium-term fast GenAI revolution. They expect it to deliver 18.2 per cent EBIT margin in FY25.

Nuvama added that the sharp re-rating has been driven by higher growth than peers and rectification of its capital allocation policy. The brokerage has maintained a buy rating on the stock at a revised target price of ₹2,125 against ₹2,020 earlier. 

Axis Securities has given a ‘buy’ call on HCL Tech at a target price of ₹2,045. It believes that the stock is well-positioned for sustained long-term growth, and expects favourable demand environment to reduce uncertainty around discretionary spending.

Nomura has maintained buy call at a target price of ₹2,000.

Global brokerage Morgan Stanley has maintained an overweight call at an increased target price of ₹1,970.

Analysts of Emkay Global expect the stock to consolidate after a strong rally. They noted that although the management witnessed initial signs of improvement in discretionary spending, it has refrained from affirming the acceleration in demand, given false signals experienced in the past, macro uncertainties, and geopolitical concerns.

Emkay has increased the target multiple to 26x from 25x on strong execution and has retained ‘add’ call at a target price of ₹1,950 per share.

HDFC Securities has also maintained ‘add’ call at a target price of ₹1,900. The brokerage mentioned that the manufacturing vertical has client-specific risks, however, it has increased earnings estimate by 3 per cent to factor in broad-based growth improvement and concurrent margin enhancement.

Cautious stance

HSBC has maintained ‘hold’ at an increased target price of ₹1,700.

Meanwhile, domestic brokerage ICICI Securities — that retained its ‘reduce’ rating on HCL Tech at a target price of ₹1,710 — has pointed out that despite a better-than-expected Q2 result, revision in guidance is not to the same extent, implying a cautious outlook for H2FY25.

Brokerages such as Elara Securities, Jefferies and Investec have also recommended sell calls at a target price of ₹1,620, ₹1,770 and ₹1,540, respectively.

The stock closed marginally higher on the NSE at ₹1,866 after hitting a new peak at ₹1,882.75 on Tuesday. 

Related Topics