Tue Jan 14 04:09:34 UTC 2025: ## HCL Tech’s Q3 Results Meet Expectations, but Future Growth Uncertain

**MUMBAI** – HCL Technologies (HCL Tech) reported Q3 results largely in line with analyst expectations, but a revised revenue outlook and concerns about future growth have tempered enthusiasm. While the company upgraded its FY25 growth guidance to 4.5-5 percent (including 0.5 percent inorganic growth), Q4 is projected to be weak due to a large project ending and planned reductions in another. This translates to a projected -1.3 percent to +0.6 percent QoQ growth in Q4FY25, impacting potential FY26 growth, according to Nuvama.

The IT services margin declined slightly in Q3 due to wage hikes and other factors, though this was offset by operating efficiency and forex benefits. Total contract value grew 9 percent year-on-year.

However, analysts at Motilal Oswal Financial Services (MOFSL) described the Q3 numbers and Q4 guidance as “underwhelming,” particularly citing the slower ramp-up of discretionary deals in Q4 as a concern. The implied organic growth rate for IT&BS in Q4 is only 0.6 percent at the upper end of guidance, attributed by management to the planned ramp-down of a Verizon deal and project completions.

With HCL Tech’s valuation now on par with industry giants TCS and Infosys, analysts believe the bar for further share price appreciation is higher. While MOFSL maintained a ‘Buy’ rating with a target price of Rs 2,100, Nuvama downgraded the stock to ‘Hold,’ setting a target price of Rs 2,150, citing limited upside potential given its current valuation and the availability of comparably priced competitors. Despite HCL Tech’s strong growth and cash flow, Nuvama notes the stock trades at a premium compared to peers like Infosys.

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