BENGALURU, Jan 13 (Reuters) – Shares of Indian IT firm HCLTech (HCLT.NS) slipped nearly 3% on Friday after lowering its revenue growth outlook for the current fiscal year, while analysts flagged concerns over the company’s growth prospects in the fourth quarter.
HCLTech’s stock marked its biggest intraday percentage drop in five weeks, making it the top loser on the bluechip Nifty 50 Index (.NSEI).
The Noida-based company on Thursday lowered its revenue growth projection for the fiscal year ending March 31, 2023, to 13.5-14% from 13.5%-14.5% previously, citing seasonal challenges in the fourth quarter.
It also tightened its full-year EBIT (earnings before interest and taxes) margin outlook, to 18%-18.5% from 18%-19% previously.
“Revised guidance … implies a soft Q4, which may also be dragged down by seasonal weakness in the products business,” HSBC Securities and Capital Markets analysts wrote in a note.
While there was no indication of a slowdown and the company’s order book remained strong, the company was seeing delays in decision making in Europe, HCLTech Chief Executive C Vijayakumar said on Thursday, echoing similar commentary from larger rival Tata Consultancy Services Ltd (TCS.NS).
Analysts at Jefferies also flagged concerns over HCLTech’s net hiring slowing to its second-lowest in nine quarters, adding that they saw limited upside in the stock “amidst rising demand uncertainty.”
Flat services margins and HCLTech’s growth being skewed to Europe were key concerns, Morgan Stanley analysts noted.
Twenty five out of 41 analysts rate the stock at “buy” or “strong buy”, 13 rate it as “hold”, while three have a “sell” rating, according to Refinitiv data.
HCLTech however reported a bigger-than-expected 18.2% rise in quarterly profit to 40.69 billion rupees ($499.82 million) for the third quarter, helped by strong deal wins.
Larger rival Infosys’ (INFY.NS) shares were largely unchanged after it posted a better-than-expected profit and lifted its full-year revenue guidance.
($1 = 81.4100 Indian rupees)
Reporting by Nandan Mandayam in Bengaluru; Editing by Dhanya Ann Thoppil and Eileen Soreng
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