HCLT reported weak results with revenue growth of 2.5% in CC terms (DE 3.3%) and OPM at 16.6% (DE: 19.8%). Results performance was affected by weak revenues, impairment impact of $16mn in P&P segment. Guided strong revenue growth for FY22 with base growth of double-digit, which along with strong TCV data (Net New TCV at $7.3bn in FY21 – up 18% growth) implies potential for much wider growth print for the year. OPM guidance stood at 19%-21% is bit disappointing. Management has factored in some bit normalisation of discretionary cost savings and need for investments in new Geos and Mode 2 Digital offerings in the Engg Services as reason for the wider/lower band.
OutlookWe believe strong double digit organic growth guidance backed by strong TCV/Pipeline, along with much improved FCF profile makes a strong case of re-rating of the stock and thus we maintain HCLT as our Top Pick with TP of Rs1,140 valued at 20x on FY23E earnings.
For all recommendations report, click hereDisclaimer: 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!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
Read More
