HSBC has maintained its Hold rating on HCLTech, while raising the target price to Rs 1700, following the release of the company’s Q2 FY25 results. HCLTech reported a strong quarter, with both topline and margins exceeding expectations, and stable deal wins.
In its Q2 FY25 performance, HCLTech’s revenue in dollar terms increased by 2.4% quarter-on-quarter to $3445 million, compared to $3364 million in the previous quarter. In rupee terms, revenue grew by 2.9% to Rs 28,862 crore from Rs 28,057 crore. The company also reported an EBIT of Rs 5,362 crore, up from Rs 4,795 crore, with an EBIT margin improvement to 18.6% from 17.1%.
Despite these positive results, HCLTech’s profit after tax (PAT) saw a slight decline of 0.5%, dropping to Rs 4,235 crore from Rs 4,257 crore in the previous quarter. The drop in profit is attributed to lower other income, which offset the gains from improved margins.
HSBC noted that while HCLTech has slightly upgraded its FY25 guidance, the implied guidance for the second half does not suggest significant acceleration. This cautious outlook, coupled with the company’s current valuations being in line with industry leader TCS, limits the potential for near-term re-rating.
