HCL Tech Q3 Profit Up, Shares Rise by 5 Percent

Bangalore: The shares of HCL Technologies gained a 5 percent rise as soon as the company announced 28 percent rise in their quarterly profit, powered by the outsourcing of contracts by the global customers that wanted to cut off the cost of the operations in an uncertain global economy.

The estimated net profit this fiscal rose from 468 crore to 600 crore. Aniruddha Mehta, Research Analyst, IIFL, said that this quarter of the year HCL Tech’s earned more profit than Infosys, still EBITDA ( earnings before interest, taxes, depreciation and amortization) margins for HCL tech will remain under pressure.

Due to the pricing cuts in the last quarter, the earnings before interest and tax margins, which was expected to fall has grown higher than expected by 15.7 percent. HCL Technologies opened with gain of over 5 percent in the trade opening and the stock touched 508.90 which is a jump of nearly 6 percent.

The benchmark index was trading 0.6 percent higher at 17, 474.84, whereas in the morning the shares of the company were trading at 5.8 percent higher at 508.75.

"HCL Technologies structurally looks very strong and have good support at levels around 480. The way the stock has moved from Rs 382 to Rs 500 zone gives a feeling that there is more upside in the stock," said Prakash Gaba, CFT, prakashgaba.com, according to the Economic times.

Dipen Shah, Head of Fundamental Research, Kotak Securities voiced his views regarding the Q3 results and said, “HCLT’s operating results were almost in line with expectations. The 2.9 percent (4.9 percent in 2Q) volume growth in Software Services was in line with expectations and was better than the de-growth reported by Infosys. HCLT has achieved consistency in revenues, especially in Software Services, over the past few quarters. HCLT’s focus on the churn market has yielded results with record wins of $1.5bn in 3Q and $2.5bn in past 6 months, mostly from F500 / G2000 companies. However, there are concerns like de-growth in BFSI (4.1 percent) and U.S. geography (1.1 percent), in constant currency terms. Even the employee strength has reduced QoQ. The stock has run-up quite a bit over the past few months and is trading at a lower discount to larger peers. Overall, our view is neutral.”