HCL Technologies Limited (NSE:HCLTECH) Just Reported And Analysts Have Been Lifting Their Price Targets

Simply Wall St · 10/18 00:10

Investors in HCL Technologies Limited (NSE:HCLTECH) had a good week, as its shares rose 3.3% to close at ₹1,868 following the release of its quarterly results. HCL Technologies reported US$3.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.19 beat expectations, being 5.0% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for HCL Technologies

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NSEI:HCLTECH Earnings and Revenue Growth October 18th 2024

Following last week's earnings report, HCL Technologies' 43 analysts are forecasting 2025 revenues to be US$13.9b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 2.6% to US$0.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$13.8b and earnings per share (EPS) of US$0.75 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 8.1% to ₹1,858despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of HCL Technologies' earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values HCL Technologies at ₹2,300 per share, while the most bearish prices it at ₹1,449. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the HCL Technologies' past performance and to peers in the same industry. It's pretty clear that there is an expectation that HCL Technologies' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.8% growth on an annualised basis. This is compared to a historical growth rate of 7.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than HCL Technologies.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that HCL Technologies' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for HCL Technologies going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with HCL Technologies .