Sharekhan's research report on HCL Technologies
Q2FY23 numbers were robust with a beat in revenue/EBIT margin with CC revenue growth of 3.8% (versus expectation of 3%) and EBIT margin improvement of 93 bps q-o-q to 18% despite wage hike impact and variable pay. TCVs also picked up, rising 16% q-o-q to $2.3 bn while LTM attrition was flat q-o-q at 23.8% in IT services. Revenue growth was broad-based across vertical and geographies and was driven by 5.3%/5% q-o-q increase in CC revenue growth from ITBS/ERS); however, PP revenue declined by 7.8% due to seasonality. EBIT margin improvement reflects better realisations, higher utilisation, pyramiding optimization and INR depreciation. Raised CC revenue guidance to 13.5%-14.5% (versus 12-14% earlier) while revision in EBIT margin to 18-19% (18-20% earlier) is broadly on expected lines. Management targets deal wins of $2-2.5 bn every quarter and expects US market to lead the growth momentum while Europe would see little lower growth given macro environment.
Outlook
We maintain a Buy on HCL Technologies with an unchanged PT of Rs. 1,140, given strong growth in application services, good dividend payout, healthy order intake and reasonable valuations.
More Info
At 10:54 hrs HCL Technologies was quoting at Rs 976.80, up Rs 25.15, or 2.64 percent.
It has touched an intraday high of Rs 987.75 and an intraday low of Rs 969.40.
It was trading with volumes of 153,826 shares, compared to its thirty day average of 234,582 shares, a decrease of -34.43 percent.
In the previous trading session, the share closed up 1.39 percent or Rs 13.05 at Rs 951.65.
The share touched its 52-week high Rs 1,359.00 and 52-week low Rs 875.65 on 13 January, 2022 and 29 August, 2022, respectively.
Currently, it is trading 28.12 percent below its 52-week high and 11.55 percent above its 52-week low.
Market capitalisation stands at Rs 265,070.81 crore.
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