‘Small warnings started’: Why HCL Tech shares fell 7% today. | Jobs Vox


Shares of HCL Tech today fell 7% to 1,028 on the BSE after its management indicated that FY23 growth is at the lower end of the range of 13.5% to 14.5%. It was the biggest loser among the 30 Sensek stocks. In comparison, the Sensex fell 0.3%.

Chief Executive Officer C Vijayakumar said at the company’s investor day, “In October, we increased our guidance from 13.5% to 14.5%. We had certain assumptions that helped us come up with a 16-17% growth in services. We assumed certain absences. But we see a little more. BFSI is the segment that is slightly affected by the layoffs, followed by technology companies,” he said.

Market veteran Sandeep Sabharwal, former head of equity at SBI MF, said in a tweet, “Small alerts have started. It will get bigger as we move into 2023. Avoid technology and export-oriented sectors in general. You’ll get them cheaper in the next 6 months.”

Shares of Infosys, Wipro and Tech Mahindra also fell between 1% and 3% today. IT stocks have seen a sharp correction this year on fears of a slowdown in demand for IT services amid global macro uncertainties. The Nifti IT index has fallen 22% this year compared to a 7% gain in the broader Nifti50 index.

HCL Tech in October raised its revenue growth forecast to 13.5%-14.5% from 12%-14% on a constant currency basis, citing strong order bookings and pipeline. Vijayakumar added that the company has a good pipeline that it expects to deliver “decent bookings” in the coming quarter.

India’s IT services industry has been one of the biggest benefactors during the pandemic as several businesses rushed to digitize infrastructure and adopted remote or hybrid work policies. In 2021, the Nifti IT index has risen by almost 60%.

However, many top IT companies have so far issued cautious forecasts recently amid global economic uncertainty as global central banks tighten their monetary policies. TCS had earlier said that clients need more time to decide on larger deals.

In a recent note, domestic brokerage Emkai said: “The performance of sequential revenue growth in the third quarter is expected to be affected by layoffs, fewer working days, softness in select pockets and delayed decision-making due to macro uncertainty.” Companies pointed to slower decision-making by clients amid macro uncertainty that would weigh on discretionary spending and closing large deals. The technology budget cycle may be extended this year, due to prevailing macro uncertainties. This may impact the trajectory of revenue growth in the fourth quarter.” (with agency contributions)

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