Mahindra & Mahindra, Blue Dart among 56 BSE stocks at new 52-week highs; Birla Tyres, Dhampur Sugar at new low BSE Sensex and NSE Nifty 50 soared over 2 per cent on Monday on the back of firm global momentum. BSE Sensex hit a day’s high of 56,082.65, and Nifty 50 rose to 16,695.50. So far in the day, Mahindra & Mahindra stock price hit a fresh 52-week high of Rs 1,006.70 apiece, surpassing its previous high of Rs 978.90. While no stock on S&P BSE Sensex hit a fresh 52-week low. In the noon deals on BSE Sensex, a total of 56 stocks rose to their fresh 52-week highs. The marquee names were Abhinav Capital Services, Alka Securities, Amalgamated Electricity Co., Bheema Cements, Blue Dart Express, Garbi Finvest, Interworld Digital, Kohinoor Foods, Madhuveer Com 18 Network, Raymond, Sadhna Broadcast, Sharpline Broadcast, and Zenith Steel Pipes & Industries, among others hit fresh 52-week highs on BSE Sensex today. On the National Stock Exchange (NSE), 15 stocks rose to their respective 52-week highs, while 30 fell to fresh 52-week lows. The stocks that hit 52-week highs were Accuracy Shipping, Nippon India Mutual Fund – Nippon India Nifty Auto ETF, Blue Dart Express, Kohinoor Foods, Mahindra & Mahindra, Madhya Bharat Agro Products, Medico Remedies, and Wendt (India), among others. On the contrary, Biofil Chemicals & Pharmaceuticals, Dhampur Sugar Mills, GMR Power and Urban Infra, HEC Infra Projects, Hindustan Media Ventures, India Pesticides, Mangalam Organics, and Venus Remedies, among others that hit fresh 52-week lows on NSE on Monday.
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.