Gold Price Today, 22 Feb: Gold flat, dollar edges up; positive US services data increases rate hike concerns Gold Price Today, Gold Price Outlook, Gold Price Forecast: Gold rate is trading flat on Wednesday despite negative global cues, while the silver rate is down 0.32%. On Multi Commodity Exchange, gold April futures were trading at Rs 56,161 per 10 grams, down Rs 7 or 0.01%. Silver March futures were trading lower by Rs 212 at Rs 65,566 per kg on MCX. Globally, the yellow metal prices rose marginally on Wednesday, as investors awaited minutes of the U.S. Federal Reserve’s latest policy meeting to assess prospects of further interest rate hikes, according to Reuters. Spot gold was up 0.1% at $1,835.40 per ounce. U.S. gold futures firmed 0.1% to $1,845.10. “However there are also concerns about a slowdown in global growth which was alarmed by housing numbers which showed some pressure. Market participants’ focus this week will be on the FOMC meeting minutes, U.S. GDP and Core PCE data. Broader trend on COMEX could be in the range of $1820-1860 and on domestic front prices could hover in the range of Rs 55,820-56,500,” said Manav Modi, MOFSL. “Gold prices on Tuesday slipped lower, as it lost 0.37 percent and concluded at 1834.3 per ounce. The U.S. Federal Reserve’s most recent policy meeting’s minutes, which may provide information about future interest rate increases, are eagerly expected by investors. The market anticipates the U.S. central bank to keep interest rates above 5% throughout the year. The U.S. central bank increased rates by 25 basis points in its recent meeting. “U.S. business activity unexpectedly rebounded in February, reaching its highest level in eight months, according to a survey on Tuesday, which also showed inflation subsiding. Given the dollar’s continued strength and the likelihood that the U.S. Fed will continue raising interest rates, the upside potential for the yellow metal appears to be limited,” said Prathamesh Mallya, Angel One.
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.