HCLTech is now the second most expensive large IT stock, edges past Infosys in valuation

HCL Technologies, which was trading at about 21% discount to Infosys about a year ago, is now the most expensive large Information technology (IT) stock after Tata Consultancy Services. Thanks to a stellar rally in HCLTech stock over the last one year.

While TCS – the largest IT firm in the country – commands the highest valuation at 27 times its one-year forward earnings, HCLTech is trading at about 23.5x of its 12-month forward earnings against close to 23 times for Infosys, Bloomberg data show. However, the gap in market capitalisation between the two is more than ₹2 lakh crore. As of Friday’s close, Infosys commands a market capitalisation of ₹6.7 lakh crore. In contrast, the market capitalisation of HCL Technologies stood at ₹4.2 lakh crore.

Shares of HCL Technologies climbed to their record high on Friday, tracking gains in both TCS and Infosys. While brokerages raised price targets for TCS after Q3 earnings, the impressive order book of Infosys cheered investors despite narrowing its revenue guidance. HCL Technologies announced its third-quarter results post-market hours on Friday.

On Friday, shares of HCL Technologies climbed to their record high of ₹1555 on the NSE. Moreover, the stock has been an outperformer among the large IT peers. Over the last one year, the stock of HCL Technologies has yielded a return of 44%. In comparison, Infosys generated a return of 9% whereas the benchmark Nifty50 gained 27.2% during the same period.

Of the 42 analysts, who track HCL Technologies on Bloomberg, 45% have a “buy” rating on the stock. While 36% suggests “hold”, the remaining 19% recommend to sell the stock.

The gauge for IT stocks – Nifty IT Index—closed Friday’s session at 36521,70, up 5.1%. However, the index is still about 7.2% lower to the record high seen in January 2022.