Moneycontrol
Last Updated : Oct 24, 2018 06:23 PM IST | Source: Moneycontrol.com

Buy HCL Technologies; target of Rs 1090: ICICI Direct

ICICI Direct is bullish on HCL Technologies has recommended buy rating on the stock with a target price of Rs 1090 in its research report dated October 24, 2018.

Broker Research @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

ICICI Direct's research report on HCL Technologies


HCL Tech reported good set of Q2FY19 numbers. The company reported healthy revenue growth mainly led by better performance in North America (geographically). Among verticals, retail & CPG (13% QoQ) and lifesciences & healthcare (3.2% QoQ) led the growth. The company has maintained its revenue guidance of 9.5-11.5% in constant currency and margin guidance of 19.5-20.5%for FY19E. US$ revenues grew 2.1% QoQ to $2,099 million (above our estimate of 1.3% growth). At 20.0%, EBIT margins increased 30 bps QoQ (vs our 19.5% estimate). Factors that played out in margin expansion were rupee depreciation (+90 bps), productivity in terms of increase in utilization and automation (+80 bps) offset by partial wage hike (-70 bps), SG&A (-50 bps) and seasonality (-30 bps).


Outlook


HCL Tech reported good set of numbers. We believe, healthy outlook for IMS (36% of revenues), deal signings and growth momentum in mode 2 and 3 are expected to bode well for the growth. In addition, HCL has lower onsite risk as 65% of its workforce in US is locals. Moreover, it is trading at an attractive valuation (12x FY20E EPS) and discount to its peers. Hence, revise our recommendation on the stock to BUY with a revised target price of Rs 1090 (~14x FY20E 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.

First Published on Oct 24, 2018 06:23 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant