HCL Tech vs Tech Mahindra: Which IT inventory must you decide now that US elections are over?

HCL Tech vs Tech Mahindra: IT shares have been in focus for the reason that US election outcomes had been introduced. The Nifty IT index has gained greater than 3 per cent since then, buoyed by expectations of elevated spending by US shoppers and a powerful greenback. Many firms within the US depend on Indian IT firms for outsourcing their software program growth. Due to this fact, a stronger US greenback can improve the profitability of Indian firms, when changing their earnings again to rupees. This performs a major function in boosting their inventory costs.

With the conclusion of the US elections, expectations are ripe for elevated IT spending within the nation, which may benefit main Indian IT firms. The market dynamics post-election may form the funding outlook for IT shares. Amid this atmosphere, right here’s an in depth comparability to assist buyers make an knowledgeable selection between HCL Tech and Tech Mahindra.

Inventory Worth Development

Tech Mahindra has outperformed HCL Tech in 2024. Tech Mahindra has climbed nearly 36 per cent year-to-date, whereas HCL Tech has gained over 23 per cent throughout the identical interval. Each firms have delivered optimistic returns in seven of the eleven months this 12 months.

Over the previous 12 months, each IT shares delivered optimistic returns, with HCL Tech rising 41.5 per cent and Tech Mahindra round 42.5 per cent.

Boosted by sturdy market sentiment and investor confidence, HCL Tech reached an all-time excessive of ₹1,897 final week on November 14. At present, buying and selling at ₹1,836.10, the inventory is simply over 3 per cent beneath its peak. Moreover, it has surged nearly 49 per cent from its 52-week low of ₹1,235, recorded in June 2024.

In the meantime, Tech Mahindra hit a file excessive of ₹1,761.30 final month. The inventory trades at ₹1,701.30, 3.4 per cent from its peak. It has skilled an over 46 per cent rise from its 52-week low of ₹1,163.70 hit in April 2023.

HCL Tech vs Tech Mahindra: A Comparative Take a look at Q2 FY25 Earnings

Within the September quarter, HCL Tech, India’s third-largest IT providers supplier, revised its FY25 income progress outlook, elevating the decrease finish of its steering by 50 foundation factors to a spread of three.5-5 per cent, pushed by improved consumer spending.

In the meantime, in Q2 FY25, the Noida-based firm reported a web revenue of ₹4,235 crore, reflecting a ten.5 per cent year-on-year progress, although it remained flat sequentially. Income for the quarter stood at ₹28,862 crore, registering an 8.2 per cent year-on-year enhance and a 2.9 per cent rise from the earlier quarter. In US greenback phrases, income grew by 6.8 per cent year-on-year and a couple of.4 per cent sequentially. Moreover, the overall contract worth (TCV) for the quarter elevated to $2.2 billion, in comparison with $1.96 billion within the previous quarter.

In the meantime, Tech Mahindra reported a major surge in its consolidated web revenue for the July-September quarter. The revenue climbed over two-fold to ₹1,250 crore, led by particular revenue from asset gross sales, sturdy efficiency in European and non-American markets, and progress within the banking, monetary providers, and insurance coverage (BFSI) phase.

In the identical interval final 12 months, the corporate posted a web revenue of ₹493.9 crore, as per an trade submitting. Income for Q2 FY25 elevated by 3.49 per cent year-on-year, reaching ₹13,313.2 crore in comparison with ₹12,863.9 crore in Q2 FY24. The agency additionally reported web new deal wins with a Whole Contract Worth (TCV) of USD 603 million in the course of the quarter.

HCL Tech vs TechM: Which IT inventory must you decide?

The conclusion of the US elections has introduced renewed optimism to the IT sector. This presents a promising progress alternative for Indian IT majors. Nevertheless, with various enterprise fashions, sectoral dependencies, and progress prospects, buyers at the moment are confronted with the essential query – which of those two IT giants provides a greater funding alternative within the present market panorama? Here is what specialists recommend:

Ajit Mishra – SVP, Analysis, Religare Broking 

Ajit Mishra of Religare Broking prefers HCL Tech over Tech Mahindra. Given the present market dynamics and the potential for elevated IT spending within the US, HCL Applied sciences seems to be a extra beneficial funding choice. With roughly 62%-65% of its income derived from the US, HCL Tech is well-positioned to profit from a possible uptick in IT spending by massive enterprises, particularly in a strong financial atmosphere beneath the brand new administration. The corporate’s sturdy market presence, diversified product portfolio, and constant efficiency additional improve its enchantment. Moreover, HCL Tech is buying and selling at a reduction in comparison with Tech Mahindra, making it a extra engaging selection for buyers.

In distinction, Tech Mahindra’s heavy reliance on the telecom sector, which accounts for roughly 35%-40% of its income, ties its progress prospects to capex spending in areas like 5G and enterprise connectivity. Moreover, its ongoing management transition may introduce uncertainties round operational stability and strategic path. Wanting forward, it will likely be important to watch US commerce insurance policies, visa laws, and greenback fluctuations, as these elements may considerably affect the Indian IT sector’s efficiency.

Rushil Katiyar, Affiliate, Alternative Broking

Rushil Katiyar can also be bullish on HCL Tech because the IT main has a powerful basis underpinned by the strong gen AI and software program enterprise, therefore nice prospects for progress. Its AI Power digital suite permits HCLT to enhance buyer workflows and high quality of service, well-positioned to profit from the rising adoption of GenAI, which strengthens demand for cloud providers and information standardisation. The corporate has a powerful place within the progress areas of legacy modernisation and rising markets. Following a strong Q2, HCLT revised FY25 progress steering upwards to three.5-5% YoY in cc, supported by a powerful deal pipeline in Knowledge & AI, Digital Engineering, and SAP migration that balances its efforts in the direction of sustainable progress.

Sujit Modi, CIO, Share.Market

Suji Modi of Share.Market finds each shares to be equally compelling. Foundation issue evaluation powered by Share.Market analysis, each HCL Applied sciences and Tech Mahindra rating 5/5 on Momentum, Sentiment, and Low Volatility. Nevertheless, HCL Applied sciences fares higher than Tech Mahindra on the High quality and Worth issue scores. Buyers can hold this in thoughts when deciding which shares so as to add to their portfolio.

Disclaimer: The views and suggestions made above are these of particular person analysts or broking firms, and never of Mint. We advise buyers to examine with licensed specialists earlier than taking any funding choices.