HCL Technologies’ share price rose almost 5 per cent in the morning trade on BSE on Friday buoyed by Verizon’s global strategic partnership with the IT firm. The stock opened at ₹1,170 against the previous close of ₹1,134.60 and soon rose 4.6 per cent to the level of ₹1,186.70. The stock traded 3.11 per cent higher at ₹1,169.90 around 11:20 am.
HCL Tech post-market hours on Thursday said Verizon Business formed a global strategic partnership with it for managed network services. The announcement seems to have given a sentimental boost to the stock.
“HCL Tech will be Verizon Business’s primary collaborator in all deployments involving MNS globally for enterprise customers,” HCL Tech said, adding that “Verizon Business will lead sales, solutions, and customer acquisitions, and HCL Tech will lead post-sale implementations and ongoing support”.
HCL Tech pointed out that the partnership will offer customers a “best-in-class MNS portfolio, a highly digitized experience with data-driven service models, enhanced efficiency and lifecycle management with a frictionless interface, a broad end-to-end partner ecosystem, and joint innovation on an integrated platform.”
“Managed Network Services is core to our business, and we’re proud to collaborate with Verizon Business to lead MNS in all of their network deployments, modernization and operations for private enterprise,” said C Vijayakumar, CEO and Managing Director, HCLTech.
“Our data-driven service delivery, advanced network capabilities and frictionless customer interfaces combined with the unique strengths and resiliency of the Verizon network will enable enterprises to drive better business outcomes and time to market,” said Vijayakumar.
Analysts see this partnership announcement as significantly positive for the company.
“With all the gloom and uncertainty surrounding the IT sector on the technology spending front, the HCL Tech deal with Verizon Communications amounting to $2.1 billion is definitely positive news. While large deal news was anticipated against the backdrop of the management commentary post first quarter results, we would not be surprised to see additional deal news from the company going forward,” said Dhruv Mudaraddi, a research analyst at StoxBox.
“The largest deal for HCL not only provides it revenue visibility for the next six years starting November 2023, but it also seems an effort by Verizon to drive cost efficiencies and a step towards vendor consolidation. We continue to believe that larger players in the IT space are better poised to bag large transformational deals in the current difficult operating environment, especially due to a large product bandwidth and economies of scale,” said Mudaraddi.
Meanwhile. the June quarter results of HCL Tech missed Street estimates. It reported a 7.6 per cent year-on-year growth in consolidated net profit in the first quarter of fiscal 2023-24. The IT major’s profit after tax declined by 11.27 per cent in Q1FY24, compared to ₹3,983 crore in the preceding March quarter of fiscal 2022-23.
The company retained its guidance of 6-8 per cent constant currency revenue growth for FY24, and operating margin or EBIT margin at 18-19 per cent. According to the FY24 guidance, the constant currency services revenue growth is expected to be between 6.5-8.5 per cent.
In the last one year, shares of HCL Tech have gained 21 per cent against a 10 per cent gain in the equity benchmark Sensex.
