Oct 18, 2012, 01.15 PM | Source: Moneycontrol.com
Dolat Capital is bullish on HCL Tech and has recommended accumulate rating on the stock with a target of Rs 655 in its October 17, 2012 research report.
, Dolat Capital |
“HCL Tech, we believe the strong volume growth of about 4.5% QoQ and 12 multi million USD deals won during the quarter indicates sustained business traction. Also maintenance of OPM at 19.4% despite wage hikes impact of 80bps during the quarter indicates improved efficiency and productivity gains. The company has been delivering strong revenue growth compared to its peers with improved profitability profile and sustenance on the same remains potential upside risk to the estimate. We maintain our positive stance on the stock with a target price of Rs 655 (valued at 12x of FY14E earnings).”
“Management continues to remain confident on business outlook in coming period and expects better H2 versus H1 citing TPI’s expectation of 100% jump in deal renewals in H2 over H1. It has won its fair share in these renewal deals over last few quarter and 80% of these new deals wins were from the G2000 clients. The management believes that it has benefitted as it shifted back its focus with full energy back to the developed markets (US, Euro) as it witnessed more number of RTB deals due for renewal and defocused ROW for the moment. It is also witnessing strong traction in the BFSI segment (contrary to peers) largely driven by vendor consolidation efforts.”
“We expect the company to maintain strong financial outperformance with a Revenue/ EPS CAGR of 16/23% over FY12-14E (FY14 EPS revised up by 9%), driven by sustained deal win momentum and renewed focus on margin maintenance. We maintain our positive view on the stock based with an Accumulate rating with a target price of Rs 655 (valued at 12x of its FY14E 20% discount to Infosys target multiple),” says Dolat Capital research report.
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