HCL Tech gains 6% on robust Q2 result, bonus issue; here's what brokerages say

Shares of HCL Technologies added 6 percent intraday on October 24 after robust Q2 numbers and upward revision in full-year revenue guidance.

The company's Q2FY20 profit increased 19.4 percent to Rs 2,651 crore versus Rs 2,220 crore in the June quarter, while revenue grew by 6.7 percent quarter-on-quarter to Rs 17,528 crore

It has registered a 5.2 percent QoQ growth in dollar revenue at $2,486 million and constant currency topline growth was 6 percent QoQ.

The company approved the issue of one bonus share for every share held by shareholders and declared an interim dividend of Rs 2 per equity share for the Financial Year 2019-20.

The company raised full-year constant currency revenue growth guidance to 15-17 percent from 14-16 percent earlier but maintained FY20 EBIT margin guidance at 18.5-19.5 percent.

It has appointed Shikhar Malhotra as a non-executive non-independent director on its board.

According to the research firm, the results are in-line at the revenue level and much better at the margin level.

Raising revenue growth guidance for FY21 reflects strong execution, the firm added.

It raised FY20-21 EPS by 0-3-1 percent

The organic growth rates have been better than peers' and revenue growth was driven by the integration of IBM products, said Morgan Stanley.

It raises revenue & profit estimates slightly, while EPC estimates are largely unchanged.

The H2 margin could be 19.5 percent as additional revenues flow from the IBM Deal, it added.

Company's core business growth and outlook are better than expectations and valuations are undemanding and risk-reward is favourable, said HSBC.

The company will likely to register the fastest organic growth in FY20 against its peers. An increase in organic guidance should drive some re-rating, said Credit Suisse.

At 0948 hrs, HCL Technologies was quoting at Rs 1,129.00, up Rs 33.35, or 3.04 percent on the BSE. Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.