Stock Market Today: After Tata Consultancy Services (TCS) reported better-than-expected Q1FY24 results, HCL Technologies' Q1FY25 results also beat market expectations. Hence, HCL Technologies shares are expected to remain in focus even when Indian stock markets resume trading on Monday.
According to stock market experts, HCL Tech's Q1FY25 performance beat market expectations despite a decline in EBITDA margins. The company's Q1FY25 earnings received strong support from the telecom industry. However, there are concerns over growth prospects for FY25 and worries over rising attrition continue.
HCL Tech FY25 Q1 Performance Review
Commenting on HCL Tech's Q1FY24 performance, Manish Choudhury, Head of Research at Stocksbox said, “HCL Tech's Q1FY25 performance beat all expectations, but concerns remain over the company's FY25 growth. Net profit included a one-time gain from the sale of its joint venture with State Street, which will also have a significant impact on Q2 sales. Revenue health was supported by robust growth in telecom and retail segments, which helped offset declines in healthcare and utilities segments. Revenue was also supported by healthy growth in the software segment, which was expected to decline due to seasonality.”
“The decline in EBIT margin due to higher on-site costs was smaller than expected, reflecting the focus on improving efficiency. However, increased attrition in a resource-starved environment is a concern. With State Street's offshoring impacting the company in the second quarter as well, we expect growth to start to show in the numbers from the second half of the year onwards. Management's comments on hiring plans, investments in GenAI partnerships and solutions, new business growth and future outlook will be key points to watch,” say Stocksbox experts.
HCL Tech Stock Price Target
Sumeet Bagadia, executive director, Choice Blocking, expects HCL Tech shares to rise significantly after the announcement of its Q1FY24 financial results and said, “HCL Tech shares are on an uptrend and currently its market price (CMP) is at ₹“1560.20. This indicates that bullish sentiment surrounding this stock is strong. What is particularly encouraging is that HCL Tech is trading above its 20-day, 50-day and 200-day moving averages. A stock price in line with multiple moving averages is a positive sign for investors, as it indicates a consistent and sustained uptrend.”
“Furthermore, there is a minor resistance level at 1575 which if broken could trigger further upside. This means that the stock is likely to move higher. The Relative Strength Index (RSI) is trending up at 75.29 suggesting picking up buying activity. However, investors should watch the stock with caution as the favourable outlook could be negated if the stock sinks below 1488,” Bagadia added.
On his recommendation to stock market investors regarding HCL Tech shares post Q1FY25 earnings, Bagadia said, “We recommend buying CMP shares of HCL Tech.” ₹1560.20 level, and may also be added to on any nearby dips. ₹1530 Stop Loss ₹1488 Goals ₹1680.
Disclaimer: The views and recommendations expressed above are those of the individual analysts or brokerage firms and not those of Mint. You are advised to check with a qualified professional before making any investment decisions.
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