Shares of HCL Technologies Ltd gained 7 percent on Thursday after it reported mixed performance for the June quarter, but maintained its growth guidance for FY20. The company guided for 14 percent to 16 percent revenue growth in FY20 in constant currency terms and maintained FY20 EBIT margin guidance of 18.5 to 19.5 percent.

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The stock rose as much as 7.1 percent to Rs 1,095 per share in intra-day deals on BSE. It ended 7 percent higher at Rs 1,094 as compared to 1,74 percent (637 points) rise in BSE Sensex at 37,327. For the year, the stock has gained over 13 percent.

The company posted a 13 percent sequential decline in the June quarter (Q1) profit at Rs 2,220 crore, dented by operating income. The profit in the previous quarter was Rs 2,568 crore. On a year-on-year, its profit fell 7.6 percent.

Revenue was ahead of estimates at Rs 16,425 crore in the quarter ended June 2019, growing 2.7 percent sequentially and 18.7 percent year-on-year, the company said in its BSE filing.

"We have started FY20 on a very strong note with quarterly revenue growth of 4.2 percent QoQ and 17 percent YoY in constant currency. With our current momentum, we aspire to register an industry-leading organic growth in FY20," C Vijayakumar, President, and CEO said.

Prateek Aggarwal, CFO of HCL Tech, added that "We expected organic growth to be 7-9 percent and we continue to maintain the overall growth guidance of 14 to 16 percent. IBM deal was to close by June 1 which has now closed on July 1, so there is a shortfall in revenue from an inorganic perspective. We believe we will make up for this through organic growth."

On guidance, he said the company is cautiously optimistic. "We are a little cautious because of the trade wars. We really do not know what is in store from broader economy and client spending in the second half of the year," he observed.

Meanwhile, brokerages were positive on the stock post Q1 numbers. Jefferies had a 'hold' rating on the stock but raised its target to Rs 1,120 per share from Rs 1,090 earlier. The company reported stronger than expected revenue growth of 4.2 percent QoQ in the constant currency which was helped by large deal ramp-up and lower client-specific headwinds, it added.

Nomura and CLSA had a 'buy' rating on the stock. The company reported stellar revenue with organic growth accelerating above larger peers and organic growth guidance was raised on large deal ramp-ups and digital traction, CLSA noted, adding that margin decline was largely a one-off from IBM deal transition costs.

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First Published:Aug 8, 2019 1:16 PM IST