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