On Tuesday, CLSA increased the price target for HCL Technologies (NS:HCLT:IN) to INR1,882 from INR1,761, while keeping a Hold rating on the stock. The adjustment follows HCL Technologies' third-quarter financial results for the fiscal year 2025, which met analyst expectations.
The company also updated its constant currency (CC) revenue growth forecast for the fiscal year 2025 to a range of 4.5%-5% from the previous 3.5%-5% projection. This revision includes the impact of acquiring assets from Hewlett Packard Enterprise (NYSE:HPE)'s Communications Technology Group (CTG).
The management of HCL Technologies noted an increased demand momentum, particularly in smaller deals, with the annual contract value (ACV) for the third quarter of FY25 growing by 23% year-over-year and 9% quarter-over-quarter. The demand is spread across various sectors such as Banking, Financial Services and Insurance (BFSI), retail, high technology, and manufacturing, excluding the automotive industry. This trend is in line with the demand improvement tone reported by Tata Consultancy Services (NS:TCS).
Despite the positive demand indicators, Citi expressed a mild disappointment due to the unchanged midpoint of the FY25 organic growth guidance, which remains at 4.25%. As a result, CLSA has slightly reduced its forecasts for HCL Technologies' CC revenue growth for FY25 and FY26. Additionally, the firm has lowered its earnings per share (EPS) estimates for the company by 1%.
The revised price target of INR1,882 reflects CLSA's updated valuation of HCL Technologies' shares, taking into account the latest financial data and market conditions. The Hold rating indicates that CLSA does not recommend either buying or selling the stock at the current price level, but suggests investors maintain their existing positions.
In other recent news, HCL Technologies has experienced several adjustments in its stock target by financial giants Goldman Sachs and JPMorgan. Following HCL Technologies' quarterly financial results, Goldman Sachs reduced its price target to INR1,770 while maintaining a neutral rating.
The company reported a revenue increase of 3.8% quarter over quarter, slightly below Goldman Sachs' estimates. Similarly, JPMorgan adjusted its price target for HCL Technologies to INR2,200, while maintaining an overweight rating. The company recorded a 1.7% quarter-over-quarter growth in constant currency, expected to be the highest among its competitors.
In addition to these adjustments, JPMorgan upgraded HCL Technologies from Neutral to Overweight, increasing the price target to INR 2,250. This upgrade was influenced by the integration of the CTG acquisition, anticipated to enhance HCL Technologies' constant currency revenue growth by 3% over the fiscal years 2026-2027. JPMorgan projects HCL Technologies to emerge as the fastest-growing large-cap company during this period.
These recent developments indicate a positive outlook for HCL Technologies, which is expected to maintain its growth momentum. The company's portfolio composition is seen as less dependent on discretionary spending outside the Banking, Financial Services, and Insurance sector. This, coupled with strategic acquisitions, positions HCL Technologies well for future growth.
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