Buy HCL Tech; target of Rs 840: Nirmal Bang

Nirmal Bang is bullish on HCL Technologies (HCLT) and has recommended buy rating on the stock with a target price of Rs 840 in its February 21, 2013 research report.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney master your money IThe Winning Leap SME Special
Moneycontrol

Home » News » Recommendations

Feb 21, 2013, 03.21 PM | Source: Moneycontrol.com

Buy HCL Tech; target of Rs 840: Nirmal Bang

Nirmal Bang is bullish on HCL Technologies (HCLT) and has recommended buy rating on the stock with a target price of Rs 840 in its February 21, 2013 research report.

Like this story, share it with millions of investors on M3

Buy HCL Tech; target of Rs 840: Nirmal Bang

Nirmal Bang is bullish on HCL Technologies (HCLT) and has recommended buy rating on the stock with a target price of Rs 840 in its February 21, 2013 research report.

Post Your Comments

Share Cancel

(more)

, Nirmal Bang |

Nirmal Bang is bullish on HCL Technologies (HCLT) and has recommended buy rating on the stock with a target price of Rs 840 in its February 21, 2013 research report.

“RDA, a key client of HCLTech has filed for Chapter 11 bankruptcy with the US Bankruptcy Court in the southern district of New York. RDA, owner of the popular magazine, Reader’s Digest, is reeling under a high debt burden and will restructure it to finally emerge with a debt of around US$100mn, around US$465mn lower. It should be noted that this is the second time since August 2009 that RDA has filed for bankruptcy. RDA’s international operations are not part of the filing.”

“RDA had signed a seven-year, US$350mn deal with HCLT in March 2009, encompassing application development and infrastructure management services spanning 45 countries across North America, Latin America and Asia. Thus, annualised deal revenue amounts to US$50mn.  In our view, an important event to watch out for is RDA’s emergence from bankruptcy. In our view, a worstcase scenario would be RDA shutting down, in which case HCLT would lose the contract and write down receivables to the tune of US$4.3mn. There could also be uncertainty regarding RDA’s IT strategy after emerging out of bankruptcy, in which case HCLT’s revenue from RDA could also decline.”

In a worst case scenario of HCLT losing the RDA contract, we expect revenue impact of 0.9%, EBITDA margin impact of 50bps and EPS impact of 2.5% in FY14E. Currently, in the wake of stronger-than-peer revenue growth, healthy EPS CAGR of 28.8% over FY12-FY14E and reasonable valuation at 12.2 FY14E EPS, we have retained our buy rating on HCLT with a target price of Rs840,” says Nirmal Bang research report.

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click here

Buy, Hold, Sell ? Hear it first on M3
Buy HCL Tech; target of Rs 840: Nirmal Bang

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login