Buy HCL Technologies; target of Rs 1119: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on HCL Technologies

HCL Technologies Limited (HCLT) Q1FY23 performance was in line with our estimate and posted a steady quarter and grew by 2.7% QoQ, impacted by seasonally weak services businesses. Strong growth in ERS, supported by two large ERS deals (both in the ISV segment), growth in ER&D services, Mode-2 driving IT&BS growth, cross-sell of services into the P&P customer base, integrated/vendor consolidation deals, positive commentary on the deal pipeline & net new bookings, pricing, sub-contracting cost rationalization, fresher/pyramid and utilization are expected to be the key drivers for revenue growth and margin expansion going ahead. Proactive investments in digital competencies, especially on data, cloud and experience did impact margins but have improved the durability of growth. Our target price of INR 1,119 is based on 20x Mar-24E EPS with EPS CAGR of 7.3% over FY22-24E.

Outlook

HCLT is currently trading at a valuation with a P/E multiple of 17.4x/16.4x on FY23E/FY24E earnings. Given its deep capabilities in the IMS space and strategic partnerships, continued investments in the cloud/digital capabilities, we expect HCLT to emerge stronger on the back of rising demand for the services from the enterprises. Due to global fear for recession in USA/Europe, continued supply side pressure, higher attrition, lower realization/utilization, we are reducing our target price to INR 1,119 (Earlier target price of INR 1,391 per share) with a P/E multiple of 20x to the FY24 estimated EPS of INR 56, an upside of ~22% over the CMP. Accordingly, we maintain our rating to “BUY” rating to the stock.

More Info

At 17:30 HCL Technologies was quoting at Rs 917.75, down Rs 10.30, or 1.11 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 382,890 shares, compared to its thirty day average of 134,067 shares, an increase of 185.60 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 905.20 on 24 September, 2021 and 13 July, 2022, respectively.

Currently, it is trading 33.35 percent below its 52-week high and 1.39 percent above its 52-week low.

Market capitalisation stands at Rs 249,046.61 crore.

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HCL Technologies - 130722 - kr