Nifty IT Zooms Over 4.5 Per Cent After HCL Tech Posts Q4 Results

The Nifty IT index rallied over 4.5 per cent on April 23, led by positive sentiments in the sector after HCL Technologies (HCL Tech) reported its March quarter earnings for the financial year 2024-25 (Q4 FY25). HCL Tech reported a net profit of Rs 4,307 crore for Q4 FY25, an 8 per cent growth from Rs 3,986 crore in the corresponding quarter of the previous financial year (Q4 FY24). The IT giant's revenue grew 6 per cent year-on-year (YoY) to Rs 30,246 crore, up from Rs 28,499 crore in the year-ago period. On a quarter-on-quarter (QoQ) basis, net profit declined 6 per cent, while revenue increased 1 per cent.

HCL Tech's share price zoomed as much as 8.11 per cent to hit the day's high at Rs 1,600 per share on the NSE. According to Nuvama Institutional Equities, HCL Tech's Q4 results were largely in line with expectations. 

The brokerage firm added that the IT company's revenue stood at $3,498 million, down 0.8 per cent in constant currency (CC) terms QoQ, closely matching both the company's and the Street's estimates of a 0.7 per cent and 0.5 per cent decline, respectively. However, revenue from IT services grew 0.7 per cent QoQ in CC terms. The EBIT margin came in at 18 per cent, down 150 basis points (bps) from the previous quarter, which was also in line with forecasts. Total contract value (TCV) was strong at USD 2,995 million, showing a 43 per cent increase QoQ and 31 per cent growth YoY, the firm added. 

According to Elara Securities, a 1 per cent sequential revenue drop posted by HCL Technologies was as expected in a seasonally weak quarter. However, it added that a margin decline of 150 bps QoQ was sharper than expected. HCL Tech's 4.7 per cent revenue growth in CC terms for FY25 was within the guided range of 4.5 per cent to 5 per cent, Elara said.

HCL Tech FY26 Guidance

For FY26, the IT company's management guided for a revenue growth of 2 per cent to 5 per cent YoY in CC terms and EBIT margin of 18-19 per cent. Analysts at Nuvama said HCL Tech has reported the highest revenue growth in the large-cap IT Services space for three consecutive years. 

Given its guidance, it shall be able to repeat the feat in FY26 too, on our numbers, they said.

HCL Tech Announces Rs 18 Per Share Interim Dividend

HCL Tech's Board also declared an interim dividend of Rs 18 per share in Q4. This takes its total dividend payout for FY25 to Rs 60 per share. At the current share price of Rs 1593.50 apiece, as of 12:15 PM today, its dividend yield comes at 3.76 per cent, which is one of the highest among the IT sector. Infosys, for instance, has a dividend yield of 3.3 per cent, Tata Consultancy Services (TCS) has a dividend yield of 3.66 per cent. Tech Mahindra and Wipro boast a dividend yield of 2.99 per cent and 2.5 per cent, respectively.

HCL Tech's Q4 Results Fuels Positivity In IT Sector

The positive remarks from brokerages on HCL Tech's Q4 performance has fuelled positive sentiments in the IT sector. Infosys shares surged over 4 per cent, TCS rose over 3 per cent. Tech Mahindra and Wipro traded higher by around 4 per cent each. Similarly, Persistent Systems, LTIMindtree, Coforge, Mphasis and Oracle Financial Services Software too traded with solid gains between 4 per cent to 7 per cent. 

The Nifty IT index has recovered nearly 15 per cent from its 52-week low, in the previous 10 trading sessions. From its all-time high, hit during mid-December 2024, the index is still trading lower by around 23 per cent, in the bear territory.