Q2 revenue recovery, valuations may sustain rally for HCL Tech

The stock has been underperforming peers after two consecutive quarters of muted revenue growth

HCL Technologies (HCL Tech) has gained 12 per cent over the last month on expectations of a recovery in revenue growth led by strong demand outlook and robust deal pipeline. Moreover, given the lower financial performance recently vis-a-vis peers, valuations too are at attractive levels.

HCL Tech is among the cheapest large and midcap IT stocks with valuations at 22 times its FY23 earnings estimates. Over the last six months, the stock has underperformed the Nifty IT index with returns of 28 per cent as compared to the 38 per cent returns of the index.

The reason for the underperformance