Emkay Global Financial's report on HCL Technologies
HCLT delivered in-line revenue in Q1FY23; however, margins performance disappointed. Revenue grew 1.1% QoQ to USD3.02bn (2.7% CC). EBITM declined 100bps QoQ to 17.0% due to weakness in the profitability of the Services segment (down ~150bps). It signed 7 large services deals and 9 product deals across life sciences and healthcare, technology, manufacturing, and financial services with a total new deal TCV of USD2.05bn. Broad-based demand, robust deal intake (23.4%/17.9% YoY growth in deal TCV/ACV) and a near record-high pipeline augur well for revenue acceleration. HCLT has reiterated 12-14% CC revenue growth guidance for FY23, implying a 2.3%- 3.5% CQGR over Q2-Q4. Despite weak margins in Q1, it has retained 18-20% EBITM guidance for FY23, factoring in anticipated improvement in margins in coming quarters.
Outlook
We cut FY23/FY24/FY25 EPS estimates by 3.2%/2.3/2.5%, factoring in the Q1 miss. Pressure on Services business margins remains a concern, and execution on margin recovery will be key for the stock’s performance. We maintain Buy with a TP of Rs1,100 at 18x Jun’24E EPS, considering reasonable valuations and >4% dividend yield.
More Info
At 14:32 hrs HCL Technologies was quoting at Rs 917.30, down Rs 10.75, or 1.16 percent.
It has touched an intraday high of Rs 931.00 and an intraday low of Rs 905.20.
It was trading with volumes of 347,199 shares, compared to its thirty day average of 125,940 shares, an increase of 175.69 percent.
In the previous trading session, the share closed down 1.63 percent or Rs 15.35 at Rs 928.05.
The share touched its 52-week high Rs 1,377.00 and 52-week low Rs 925.00 on 24 September, 2021 and 12 July, 2022, respectively.
Currently, it is trading 33.38 percent below its 52-week high and 0.83 percent above its 52-week low.
Market capitalisation stands at Rs 248,924.50 crore.
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!
