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Buy HCL Technologies; target of Rs 1140: Dolat Capital Market

Dolat Capital Market is bullish on HCL Technologies has recommended buy rating on the stock with a target price of Rs 1140 in its research report dated January 15, 2021.

January 19, 2021 / 03:41 PM IST
 
 
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Dolat Capital Market's research report on HCL Technologies


HCLT reported 3.5% QoQ CC growth (DE: 2.4%) led by strong growth across segments with Product & Platforms leading the pack (8.9% QoQ). OPM improved by 127bps to 22.9% (DE 21.0%) helped by cost control and improved business mix. Announced Dividend of Rs. 4 per share. HCL has upped the EBIT guidance by 100bps/50bps to 21% to 21.5% despite upcoming wage hike in Q4 and sales investments in P&P biz. As it expects incremental off-shoring led tailwinds and sustenance of cost savings. Revenue Guidance for 4Q at 2-3% is intact on organic basis. Transformational deal wins were 13 in Q3 and Booking TCV was same LQ (13% up YoY). The growth indicators are still strong with pipeline (60% of these are large/mega deals), on-going traction in P&P (New licence wins jumped 250% YoY) and improved traction in ERD business. Better than expected performance in P&P business and improving FCF generation with strong outlook & commentary, would collectively tone down all the concerns in the stock and in turn drive further re-rating in the stock.



Outlook


We retain our Buy rating with TP of Rs 1140 valued at 20x PER on FY23E EPS (2x on PEG basis).


For all recommendations report, click here


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first published: Jan 19, 2021 03:41 pm

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