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HCLTech shares fell 10% to a 52-week low of Rs 1295 on Wednesday, April 22. This is the stock’s worst one-day performance since October 2015.
Following weak Q4 results and disappointing FY27 guidance, many brokerages have downgraded ratings and cut price targets. Because of this this decline in shares has occurred.
Fourth quarter results…
1. More reduction in revenue than expected
For any company, ‘Revenue’ means how much total sales it made or how much work it did. The market felt that this time there would be a slight decline of 1% in HCL’s earnings, but in reality it fell by 3.3%. That means the company has suffered more losses than expected.
2. Profit margins dropped
‘Margin’ is the part that remains in the company’s pocket after taking out all the expenses. The market expected the company to save around ₹17.60 for every ₹100 of earnings, but the company was able to save only ₹16.50. This decline in profits has occurred due to increase in expenses or lack of projects.
3. The target for the whole year was also missed
Every year companies set a target. HCL had set a target for the year 2026 that their earnings would grow at a pace of 4% to 4.5%. But when the year ended, this pace was only 3.9%. In simple words, the company could not fulfill what it had promised.
Impact of slowdown in telecom sector
The management of HCLTech said that foreign companies have now reduced spending on non-essential projects and the work received from the telecom sector has also declined. Along with this, the sudden closure of two big projects of the company has directly affected their earnings.
The company fears that this slowdown may continue in the next quarter also. Therefore, now instead of saving the profits from dollar earnings, it will invest it in strengthening its sales team and improving technologies like Artificial Intelligence (AI) which are needed for the future.
Brokerage firms reduced target price
- InCred: Target reduced to ₹1,275 from ₹1,616. Poor booking was cited as the reason.
- Nuvama: Target increased from ₹1,550 to ₹1,400. Said growth now close to TCS and Infosys.
- HSBC: Target ₹1,560 to ₹1,480. Said that further double-digit earnings growth difficult.
- JP Morgan: Target ₹1,419 to ₹1,370. The impact of project cancellation is expected to continue.
share status
HCL Tech shares fell 10% to below Rs 1,300 on Wednesday morning. This is the 52-week low of this stock. The stock has fallen 15% in the last 6 months and 20% in a year.
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