IT companies’ December quarter results were mixed. HCL Tech reported revenue slightly above his expectations for Q3 FY24, while Wipro and Tech Mahindra’s numbers were weak.
Their future is uncertain, with major Western markets suffering from weak demand. Rising interest rates are adding to the challenge, with interest rate cuts scheduled to start from May onwards, dimming the prospects for a rapid return to profitability for tech companies.
We gathered expert opinions to identify the best bets among these three stocks for investors to consider post-Q3 earnings.
HCL Tech Q3 Results
HCL Tech posted a consolidated net profit. INR$435 billion, up 6.2% year over year (YoY) and 13.5% QoQ.
The operating revenue of major IT companies is INR2,844.6 billion yen also increased by 6.5% year-on-year and by 6.7% quarter-on-quarter. At constant currency, revenue growth was 6% quarter-over-quarter and 4.3% year-over-year.
Also Read: HCL Tech Q3 Results: Revenue Guidance to Increase Earnings — 5 Key Highlights from the IT Giant’s Earnings
Wipro Q3 Results
Wipro’s consolidated profit is INR270.06 billion, an increase of 1.2% quarter-on-quarter, but a decrease of 11.9% year-on-year. Consolidated operating revenue decreased by 4.4% from the previous year and by 1.4% from the previous quarter. INR22,251 million.
Also read: Wipro Q3 Results: Operating Revenue, YoY Profit Decrease, Dividend Announcement – 10 Key Highlights
Tech Mahindra Q3 Results
Tech Mahindra posted a 61% YoY decline in net profit; INR$510.4 million in the December 2023 quarter. INRThe same period last year was $1,296.6 million. The company’s operating revenue decreased 4% year over year. INR1,373.46 billion in Q3 FY23 INR13,101,300,000 yen during the period.
Also read: Tech Mahindra Q3 results: Net profit down 61% YoY INR510.4 million, revenue INR13.11 billion
What should investors buy?
Analysts seem to be favoring HCL Tech and Wipro over Tech Mahindra at the moment as they believe the growth prospects of these companies are brighter compared to Tech Mahindra.
CA Vatsal Vinchhi, Equity Analyst – IT Department selective stock brokerage Although the company observes that discretionary spending is soft and the overall demand environment remains cautious, HCL Tech and Wipro are seeing new growth in demand and are likely to stabilize in the near-to-medium term. There are signs of this.
“The consulting business is expected to initially recover with double-digit growth once demand stabilizes. Tech Mahindra is in the process of restructuring and has not announced its long-term strategy yet. “I suggest that we build on this while keeping in mind,” Vinci said.
Also read: TCS vs Infosys vs Wipro vs HCL Tech: Which stocks to buy after Q3 2024 earnings?
Dhruv Mudaradi, Research Analyst stock box said it is favorable to HCL Tech after considering the recent financial results and future growth prospects of HCL Tech, Tech Mahindra and Wipro.
“We like HCL Tech based on its diversified revenue streams, strategic acquisitions, and efficient operational management, creating positive prospects for sustained growth. and a focus on strong financial performance, making the company a preferred choice of the three,” Mudaradi said.
Motilal Oswal Financial Services We have a buy call on HCL Tech at the target price. INR1,880.
Motilal Oswal said HCL Tech’s portfolio will continue to grow in the current climate, where demand for cloud, network, security and digital workplace services is increasing due to increased exposure to the cloud, which accounts for a large proportion of non-discretionary spending. He said it improves resilience.
Motilal Oswal said, “Given our capabilities in the IMS and digital space, as well as our strategic partnerships and investments in cloud, we expect HCL Tech to grow even stronger in the medium term on the back of healthy demand for these services. “
On the other hand, securities companies have a “neutral” view on the stock price, and the target price is INR520.
Motilal Oswal said that given Wipro’s weak Q3 FY24 revenue growth and weaker outlook for Q4, the IT company’s FY24 revenue growth will be among the highest among Tier 1 IT services peers. It said it was among the lowest in the range and expected its margins to be below management’s target range over the medium term. 17 to 17.5 percent.
The brokerage said, “We are waiting for (1) further evidence that Wipro is executing on its revamped strategy and (2) an upturn in response from the past decade’s woes before moving the stock market into a more constructive position.” We maintain a neutral rating as we await a turnaround.”
Motilal Oswal Financial Services also has a neutral view on Tech Mahindra, with a price target of INR1,360.
The brokerage said Tech Mahindra’s third quarter results were weak but beat expectations.
Motilal Oswal said, “Tech Mahindra has strong exposure to the telecom industry, offering potential opportunities. Widespread rollout of 5G is likely to create a new spending cycle in this sector.” said.
“Near-term growth remains weak, so we are waiting for further comfort on margins. We value the company’s stock at 20 times FY26 EPS. We maintain a neutral rating on the stock,” the brokerage said. “There is,” he said.
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Disclaimer: The views and recommendations expressed above are those of individual analysts, experts, and brokerages and are not the views of Mint. We recommend checking with a certified professional before making any investment decisions.
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