HCL Technologies shares surge nearly 5% after Q1 earnings meets estimates

HCL Tech shares: Shares of HCL Technologies, India's third-largest IT services company, rose by 4.83 per cent to an intraday high of Rs 1,635.85 following its first-quarter earnings report, which met expectations. The company reported a 6.7 per cent rise in first-quarter revenue and forecasted growth across most sectors and regions for the current quarter.

This positive outlook comes after similar upbeat results from Tata Consultancy Services (TCS), suggesting potential recovery for the $254-billion industry, which has been facing sluggish demand due to clients cutting costs and limiting discretionary tech spending.

CEO C Vijayakumar noted it is still early to determine a reversal in the trend of discretionary spending. HCLTech's first-quarter revenue stood at Rs 28,057 crore, slightly above analysts' expectations of Rs 28,028 crore. Net profit for the quarter rose 20.57 per cent year-on-year to Rs 4,257 crore, surpassing the estimated Rs 3,822 crore.

Equity research associate Divija Parekh from IDBI Capital mentioned that the worst might be over, anticipating that potential rate cuts could gradually boost IT spending in the latter half of the fiscal year.

HCLTech also reported new deal wins worth $1.96 billion, compared to $1.56 billion a year earlier, including a significant contract expansion with Germany's apoBank and a five-year deal with State Bank of India. However, the company cautioned that second-quarter revenue would reflect the impact of divesting its joint venture with US-based State Street.

(With Reuters inputs)