Hold HCL Technologies: Indiabulls Securities

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Hold HCL Technologies: Indiabulls Securities

Indiabulls Securities Research has downgraded its rating on Indiabulls Securities Research to hold with a target price of Rs 194. HCL Technologies (HCL) witnessed a strong sequential growth in Q1’09. Net sales climbed 9.2% to Rs 23.7 billion on the back of the appreciating dollar visa- vis the rupee and a 1.8% volume growth during the quarter.

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Indiabulls Securities Research has downgraded its rating on  HCL Technologies to hold with a target price of Rs 194 in its October 21, 2008 research report. "HCL Technologies (HCL) witnessed a strong sequential growth in Q1'09. Net sales climbed 9.2% to Rs 23.7 billion on the back of the appreciating dollar visa- vis the rupee and a 1.8% volume growth during the quarter. At the current market price of Rs 186.9, the stock trades at a discount to the average Industry multiple of 13.5x for FY09E."

"We believe the discount is justified considering the value-dilutive acquisitions which will put stress on the overall financial performance for next 2-3 years. Based on DCF valuation, we have arrived at a target price of Rs 194, assuming an 8% Rf, a 5% terminal growth rate, and a 14.2% WACC. Since the target price is just 3.9% more than the current levels, we downgrade our rating to Hold," says Indiabulls Securities' research report.

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