HCL Technologies margins to moderate in H2FY21; investors remain cautious

US elections, a seasonally weak Q3, and sharp stock gains are weighing on return expectations

Despite a better-than-expected performance in the September quarter, the stock of HCL Technologies shed 4 per cent in trade on Friday. Moderating margins in the second half of FY21, a seasonally weak December quarter, and tempering of return expectations seem to be weighing on the stock. Prior to the correction, the stock, which is currently trading at Rs 827, had gained 43 per cent over the past three months to reach Rs 900 in October. 

While September quarter margin, before interest and taxes, was 21.6 per cent, the highest in over four years, the firm has guided for a full-year margin