Report9 : HCL Technologies (HCL Tech) shares plunged 12.65 per cent to close at Rs 857.90 in Thursday’s trade after the IT major lowered its dollar revenue guidance for the third quarter in a row. The firm of Noida, whose financial year begins in July, believes its dollar revenues for first quarter of FY16 would impact adversely to the tune of 80 basis points on account of sharp depreciation of multiple currencies against the greenback
In a pre-earnings meet, the company said it anticipates its revenues for the September quarter to be ‘tepid’, impacted by adverse currency movement and issues with a client in the public services vertical.
After the announcement, the stock dipped 14.76 per cent to hit a low of Rs 837.20. The country’s fourth largest software services firm will announce its earnings for the July-September 2015 quarter in the fourth week of October.
Nonetheless, peer group stocks such as Infosys, TCS and Wipro did not see any influence and were trading up to 2 per cent higher.
Domestic brokerage Kotak Institutional Equities has made a downward revision in the target price for the stock, but Edelweiss Securities and Angel Broking have maintained their target prices for now.
Kotak Institutional Equities in a note said, “While we appreciate that client-specific issues may be a one-off, we note that broader business challenges should not be ignored. September 2015 will be the third consecutive quarter of earnings downgrade.” The brokerage has cut the target price for the stock to Rs 875 from Rs 900.
It also added, “We believe the Street should take cognizance of deterioration in growth prospects courtesy intense competition in core IMS, weak applications portfolio and lagging digital practice. Our Cautious stance stays on the stock.” Edelweiss Securities said the caution warrants some shortening of revenue estimates, at least for FY16. “However, we will wait for Q1FY16 numbers to alter our estimates. We maintain our buy with Rs 1,030 as target price,” the brokerage said.
Sarabjit Kour Nangra VP Research – IT at Angel Broking pointed out that even as currency is a quarterly impact, the client specific issues can have an impact for the FY2016 numbers. “Though exact impact is not ascertained, as of now hence we are not changing our numbers and will wait for more clarity on the issue. However, we believe that the worst case scenario, the impact would be around 5-6 per cent on EPS in FY2016. We currently maintain our buy with a price target of Rs 1,132,” she said.