Buy HCL Technologies; target Rs 620: Dolat Capital
Dolat Capital is bullish on HCL Technologies and has recommended buy rating on the stock with a target price of Rs 620 in its July 25, 2012 research report.
July 26, 2012 / 14:17 IST
Dolat Capital is bullish on HCL Technologies and has recommended buy rating on the stock with a target price of Rs 620 in its July 25, 2012 research report.
"HCL Technology, the robust volume/pricing growth of about 1.8%/2.8% QoQ indicates sustained business traction. Also strong gains in OPM of 250bps indicate improved efficiency and productivity gains despite sustained S&M investments. The company has been delivering strong revenue growth compared to its peers with improved profitability profile. We maintain our positive stance on the stock in view of its optimistic commentary on the environment and confidence on sustenance on performance."'Management continues to remain confident on business outlook in coming period. It said that the most of the new wins are coming at the cost of global MNC players (2 in US and 1 European peer) and are restructuring deals. These deals are 20% higher in TCV as compared for 50% dip in overall TCV announced in H1CY12. It has said that it is benefitted from the right portfolio mix of service offerings coupled with integrated service mix leading to strong upsell/cross sell opportunities. It has signed 7 new MSAs in troubled BFSI sector alone, most of these are vendor consolidation deal. It has signed as preferred supplier and may see traction in these deals as it would sign multiple RFPs in coming period.""It is witnessing improved portfolio mix in its BPO verticals as non strategic voice business is getting out systemically. It expect transition to continue for another 2-3 years for the segment to deliver company level profitability. It expect OPM to slide down in H2 as it would reshift its focus back to aggressive S&M spend compared for execution priorities set at the moment. Also salary hikes of 2%/8% for onsite/offshore employees would impact OPM by 200+ bps in H1FY13."'We expect the company to maintain strong revenue growth outperformance with a revenue/EPS CAGR of 18/17% over FY12-14E (revised up by 3% on Rev/PAT for FY14), driven by sustained deal win momentum. We maintain our positive view on the stock based on attractive valuations of 10(x) of FY14E earnings with a target price of Rs 620 (valued at 12.5x of its FY14E earnings in line with its current discounting). Buy the stock," says Dolat Capital 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 on the attachment 
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