India's HCLTech slides on lower annual operating margin forecast


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Figurines with computers and smartphones are seen in front of HCLTech logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Shares of HCLTech dropped about 4% on Tuesday, a day after India's No. 3 software services provider lowered its annual operating margin forecast, dampening hopes of a rebound in client spending across the sector.

HCLTech was the top loser on the benchmark Nifty 50 index, which was trading flat on the day. It was also the top drag on the Nifty IT index, which was down 0.4%.

At least eight brokerages cut their price targets on the stock after the IT firm reduced its operating margin forecast for fiscal year 2026 to a range of 17% to 18% from a previous projection of 18% to 19%.

Six brokerages also cut their ratings on the shares, data compiled by LSEG showed.

Tariff-related uncertainty in the United States -- the biggest market for India's $283 billion IT sector -- has dashed hopes for a rebound in client confidence and spending. A survey in May showed two in five tech executives had deferred discretionary projects.

HCLTech's consolidated net profit for the June-quarter fell 9.7% on-year to 38.43 billion rupees ($447 million) even as its revenue beat analysts' average estimate.

($1 = 85.9200 Indian rupees)

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(Reporting by Manvi Pant; Editing by Sonia Cheema and Mrigank Dhaniwala)

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