Tech Mahindra, Tata Steel, Wipro among 79 BSE stocks to hit fresh 52-week lows, 50 scrips at fresh highs Domestic stock markets opened with gains on Thursday morning, mirroring global cues but failed to hold the up-move and witnessed volatility. S&P BSE Sensex, after opening 500 points higher, was down 200 points around noon. NSE Nifty 50 breached 15,800 earlier in the day but was now below 15700. While indices traded volatile 50 stocks on the BSE were seen hitting fresh 52-week highs while 79 stocks were down at fresh lows. These include marquee names such as Tech Mahindra, Wipro, and Tata Steel. Domestic markets remain volatile after US Federal Reserve hiked interest rates by 75 basis points yesterday, the highest in three decades. 52-week high/low on BSE 52-week high/low on NSE On the National Stock Exchange, only 14 stocks were at fresh highs. Among these were BLS International Services, GSS Infotech, Kohinoor Foods, Marathon Nextgen Realty, Standard Industries Limited, and Voltamp Transformers Limited. Meanwhile, there were 79 scrips trading on the NSE at fresh 52-week low values. Among these where, Aavas Financiers, AGS Transact Technologies, Alembic Limited, Amber Enterprises India, Balaji Telefilms, Dhani Services, Equitas Holdings, Equitas Small Finance Bank, Glenmark Pharmaceuticals, and Indian Railway Finance Corporation, among others. Volume trades In terms of volume, Sikko Industries was the top stock on NSE. Data showed that nearly 2 lakh equity shares of the company exchanged hands on Thursday, which is 41 times the one-week average. The stock was up 19%. Sudarshan Chemical Industries was the second-highest volume gainer, with 10.66 lakh equity shares moving between investors as the stock soared 2%. The volume traded was 31 times the one-week average. Bharat Gears stock was up 10% on Thursday and more than 2.5 lakh equity shares exchanged hands. This was 24 times the one-week average. Kirloskar Electric Company, Ramco Systems, Sagar Cements, and Mold-Tek Technologies Limited were some of the other volume gainers on NSE.
Services miss estimates; Software better than expected: Services business grew 0.6% q-o-q cc and missed HCLT’s Q3FY23 guidance, mainly due to a 3.8% q-o-q cc decline in the ER&D segment. Growth in the IT&BS segment moderated slightly to 1.6% q-o-qcc but was in line with estimates. BFSI and Life Sciences were the key growth drivers, while communications were the drag among verticals. Growth was led by the Americas region, while Europe and ROW posted declines.
Decline in bookings reflects delays in decision-making: HCLT won 10 large deals in services and three large deals in Software with net-new deal TCV of $2.1bn, down 8% y-o-y. Deal wins were driven by the services portfolio, were centered on cost optimisation and vendor consolidation and came mainly from BFSI, manufacturing and Life Sciences verticals. Management highlighted a ramp-down in discretionary spending in Hitech and communications verticals but pointed to a strong deal pipeline.
FY24 guidance in line with expectations: HCLT has guided for 6-8% y-o-y growth for overall business and 6.5-8.5% y-o-y cc growth in services segment and 18-19% margins in FY24—all in line with our assumptions. We maintain our FY24-25 cc revenue growth and margin estimates and expect HCLT to deliver 6.5% cc revenue growth and 18.4% margins in FY24. However, we lower our earnings forecasts by 2% to factor the higher tax rate indicated by the management.
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Raise PT: HCLT has fared better in Q4, particularly in North America and BFSI, unlike its peers. However, rising demand uncertainty as a US recession nears remains a concern. HCLT’s stock at CMP trades at 17x PE and offers a 5% yield, which in our view should limit downsides and derating. Hence, we raise our target PE to 17x (16x earlier) and raise our PT to Rs 1,125, offering 8% potential upside.