IT services giant HCL Technologies has signed a mega technology deal worth $2.1 billion with Verizon Business for managed network services, which it says is the largest services deal and a significant milestone for the firm.

“It is HCLTech's largest services deal and thereby a significant milestone in our services journey. It starts from November of 2023. And then, it goes on from there, six plus years,” Anil Ganjoo, CGO, TMT and RCPG-Americas, HCLTech told CNBC-TV18 on August 11, a day after the announcement.

He said that in the company’s first quarter earnings, the firm had said the pipeline and deal funnel were at an all time high. The deal pipeline continues to be at an all time high, he said in today’s interview.

Following the Verizon deal, HCLTech stands by its FY24 revenue and margin guidance, Ganjoo said.

“Revenues every year are a little varying. But at the same time, specifically the revenue for this financial year is something which will be aligned to the market guidance that we have already provided most recently. In our earnings call…we talked about the whole process of now converting that (deal pipeline) into wins and here is one of our most significant ones that we have announced - it continues to still stay very robust, very strong and we are actually working on significant other similar transactions,” he said.

Despite weak results in the June ended quarter, the company has kept the FY24 guidance unchanged. Constant currency revenue guidance is maintained at 6 to 8 percent, while EBIT margin guidance is 18 to 19 percent.

Morgan Stanley believes such deal announcements provide greater comfort and should lower the perceived risk of potential revenue guidance cut at lower end. With the current announcement, the brokerage expects some underperformance in HCLTech shares to reverse.

The brokerage has an overweight stance on HCLTech shares and has set a target price of`Rs 1,200 per share, implying it sees 5.7 percent upside from Thursday’s closing price.

HCLTech shares rallied nearly four percent in early trade on August 11. The stock was trading at Rs 1,171.80 , up 3.28 percent from yesterday's close, at 9:52 am.

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