Emkay Global Financial's research report on HCL Tech
HCL Tech’s revenue growth of 0.8% QoQ fell short of our estimates, while EBITM expansion of ~150bps was above our expectation. ER&D revenue grew by 5% CC QoQ (organic 1.6%) after two quarters of a sequential decline. It reported new bookings of ~USD4bn in Q2, its highest booking ever, driven by a mega deal (Verizon). Management has slashed FY24 revenue growth guidance to 5-6% CC YoY (earlier 6-8%), citing weak discretionary spending and lowerthan-expected performance in H1. Revised guidance implies revenue CQGR of 4.0-5.3% in H2, which management remains confident of achieving, considering the planned ramp-up in recent large deals (Verizon deal ramp-up w.e.f. November 1, 2023), software business seasonality, ongoing business momentum, and contribution from ASAP. Management has retained EBITM guidance of 18-19% for FY24.
Outlook
We tweak our FY24-26E EPS estimates (less than 1% change), factoring in Q2 performance and FY24 guidance revision. We maintain our BUY rating with a TP of Rs1,360 at 19x Sep-25E EPS.
For all recommendations report, click here
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
