HCL Share Price is bleeding. The stock nose dived to soon after the management gave a fresh guidance of its business ahead.
The Share price of HCL Technologies opened 4 percent lower on December 9 after the management indicated that FY23 revenue growth will be at the lower end of earlier guidance.
At its investor day held on December 8 in New York, the company said revenue growth in constant currency terms is seen at lower end of 13.5-14.5 percent YoY band.
Chief executive officer C Vijayakumar at company’s investor day said: “In October, we had increased our guidance from 13.5% to 14.5%. We had certain assumptions which helped us to devise 16-17% services growth. We had assumed certain furloughs. But we are seeing a bit higher. BFSI is the segment which is little bit impacted by furloughs, followed by tech companies,” he said.
HCL Share Price records as the biggest index loser today
The HCL Share Price which is the biggest index loser was quoting at Rs 1043.20, lower by 5.27 percent on the National Stock Exchange at 9:30 am. Trading volumes at 3.1 million shares were higher than 20-day average volume of 2.6 million shares.
The company’s management said the December quarter will see higher-than-expected furloughs, with BFSI and hi-tech being the problem areas. Analysts at Nirmal Bang Institutional Equities called this an industry-wide problem and not an HCL Tech-specific one.
“We get the sense that December 2022 and possibly March 2023 are likely going to be growth challenged quarters for the industry; may be a bit more than earlier anticipated,” they said in a recent report.
HCL Tech management also foresees pricing pressures in FY24. The company hinted that price increases are more selective now than they were 2-3 quarters back. “We believe that instead of a typical budget flush, there is likely under-spending of budgets that could affect Dec 2022 quarter revenue,” added Nirmal Bang.
For the quarter ended September, HCL Tech’s net profit increased 7.05 percent to Rs 3,489 crore from Rs 3,259 core reported a year ago. Revenue from operations stood at Rs 24,686 crore, clocking 19.5 percent growth over Rs 20,655 crore last year, according to a stock exchange filing.
The numbers were better than analyst expectations, following which the stock saw rating upgrades over the last quarter. ‘Buy’ calls went up to 33 from 28, while ‘Sell’ calls went down from 6 to 3 in the last quarter.
Infosys, Wipro and Tech Mahindra shares also struggled today, down between 1% and 3%. IT stocks have seen a sharp correction this year on fears of demand slowdown for IT services amid global macro uncertainties. The Nifty IT index is down 22% this year as compared to 7% rise in broader Nifty50 index.
HCL Tech had in October raised its revenue growth forecast to 13.5%-14.5% from 12%-14%, on a constant currency basis, citing strong order bookings and pipeline. Vijayakumar added that the company had a good pipeline which he expected to deliver “decent bookings” in the next quarter.
India’s IT services industry was one of the top benefactors during the pandemic as several businesses rushed towards digitising infrastructures and adopted remote or hybrid working policies. In 2021, Nifty IT index had surged nearly 60%.