IT giant which paid 1,900% dividend so far in FY23 has another surprise stored in for investors

As per the regulatory filing, on December 16th, HCL Tech announced that the company’s board of directors is scheduled to meet on Thursday, January 12, 2023, to consider:

– unaudited Financial Results of the Company for the quarter and nine months ended December 31, 2022.

– payment of the 4th Interim dividend for the financial year 2022-23.

Hence, the details of the amount of dividend HCL Tech will pay are most likely to be announced on January 12.

Also, HCL Tech has already fixed January 20 as the record date for determining the entitlement of the shareholders for the payment of the aforesaid interim dividend, subject to the approval of the board of directors.

So far in FY23, HCL Tech’s first interim dividend was ₹18 per share (900%) in April, while the second interim dividend stood at ₹10 per share (500%) in July followed by another ₹10 per share third interim dividend (500%) in October this year. Thereby, the company has already paid a dividend of about ₹28 per share so far in the current fiscal.

In the fiscal year FY22, the company paid a dividend of a whopping 2,100% aggregating to ₹42 per share to its investors. As per the financial report, HCL Tech’s dividend payment stood at ₹11,389 crore in FY22.

On BSE, HCL Tech shares closed at ₹1030.15 apiece down by 1.17% on Friday tracking broader selloffs in IT stocks. Its market cap by end of December 16 stood at over ₹2,79,548 crore. Year-to-date, HCL Tech shares have dropped by more than 22% on the exchange.

At the current market price, HCL Tech’s dividend yield comes to around 4.08%.

The stock has a 52-week high and low of ₹1,359 apiece and ₹875.65 apiece currently. As per BSE data, HCL Tech’s earnings per share is at ₹40.75, while its price-to-equity ratio comes at 25.28x, and its return on equity (ROE) is around 27.44%.

In its research report dated December 10, Centrum analysts said, HCL Technologies hosted its investor meeting in New York on December 8 to discuss the company’s strategy, outlook, and future growth. HCL Tech maintained its FY23 constant currency revenue guidance of 13.5%‐14.5%, services guidance of 16%‐17%, and EBIT margin guidance of 18‐19% for FY23, but expects to be at the lower end of the revenue guidance. The company noted some slowdown in the near term driven by higher than expected furloughs in the BFSI (20.6% of revenues) and technology (15.1% of revenues) as well as reduced discretionary spends within pockets of telecom and tech. Management also highlighted several levers which should continue to drive margin improvement. The company continues to return cash to shareholders and expects to maintain a payout ratio of 75% of net income between FY22‐26E.

Centrum’s note added, “We maintain our ADD rating on the stock, tweak our FY23E revenue forecasts slightly downwards by 0.3% and maintain our forecasts for FY24E/FY25E leaving our target price unchanged.”

During the second quarter of FY23, the company reported a 6% year-on-year (YoY) jump in consolidated net profit at ₹3,489 crore from ₹3,259 crore in the same period last year (Q2FY22). Consolidated revenue in the quarter climbed 5.2% QoQ and 19.5% YoY to ₹24,686 crore.

The IT company, however, in Q2FY23, raised its revenue growth guidance for FY23. HCL Tech now sees 13.5-14.5% growth in revenue in constant currency, as compared to 12-14% projected earlier.

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