HCL Tech market-cap touches Rs 4 trillion; stock surges 8% in two days

HCL Technologies joined an elite group of companies with a market capitalisation (market-cap) of Rs 4 trillion after the stock of the information technology (IT) major rallied 8 per cent in the past two trading days and scaled a fresh high on Friday.

HCL Tech’s market-cap touched Rs 4.02 trillion for the first time in Friday's intra-day trade. The company thus became the third Indian IT firm to achieve this milestone after Tata Consultancy Services (TCS) and Infosys.

At 11:45 am, HCL Tech was the 13th largest listed company in terms of market-cap. TCS has a market-cap of Rs 13.90 trillion, while Infosys’s market-cap was at Rs 6.48 trillion, BSE data showed.

The stock of HCL Tech rallied 5 cent to a fresh high of Rs 1,481.95 on the BSE in today’s intra-day trade sparked by a dovish US Federal Reserve, which on Wednesday forecasted at least three rate cuts next year.

In the past two months, the stock has rallied 18 per cent after the company said its earnings before interest and taxes (Ebit) margins improved by 150 basis points to 18.5 per cent in the September quarter (Q2FY24) from 17 per cent in the June quarter (Q1FY24).  

Thus far in the calendar year 2023, HCL Tech has outperformed the market by surging 43 per cent as against a 17 per cent rise in the IT index.

In exchange filing on Thursday HCL Tech said that it has won a deal from the Department of Transport and Planning in Victoria, Australia to automate the concession entitlement process for public transport users.  HCL Tech will develop and support a Concessions Entitlement Validation Platform (CEVP) for the department, enabling instant proof of concession entitlement and a passenger interface to apply for and manage concession entitlement. Deal financials were not disclosed.
 

HCL had posted a modest 8 per cent year-on-year revenue growth and maintained strong margins in Q2FY24.

Major deals during the quarter positions it for improved profitability. In Q2FY24, HCL secured 16 significant deals, with contract value totaling $3,969 million; seven in the services space and six in the software business.

The company signed a mega deal with Verizon in the quarter. The management expects bookings to remain strong in Q3 and Q4FY24.

"HCL exhibited modest revenue growth and enhanced margins in the latest quarter. Significant deals during the quarter sets the stage for improved profitability. However, the company lowered its guidance, primarily citing a decrease in discretionary spending", analysts at Geojit Financial Services had said in the Q2 result update.

Higher exposure to cloud, which comprises a larger share of non-discretionary spending, offers better resilience to its portfolio in the current context amid higher demand for Cloud, Network, Security, and Digital workplace services, as per analysts. 

Given its capabilities in the IMS and Digital space, along with strategic partnerships and investments in Cloud, Motilal Oswal Financial Services expect HCL Tech to emerge stronger on the back of healthy demand for these services in the medium term. The stock was trading above its target price of Rs 1,410 per share.