YES Securities' research report on HCL Technologies
Overall, the sequential revenue growth was inline with expectation; but the EBIT margin came much below estimates. The revenue growth is led by the Services segment (IT Services and ER&D), that continues to maintain growth momentum. The P&P Segment is expected to grow at mid single digit YoY. We expect revenue growth to be more predictable and robust going ahead as IT services contribution rises in revenue mix. Deal booking remains strong and that offers strong growth visibility for FY23. We expect it to maintain 18% + EBIT margin for FY23 led by improving employing pyramid, better utilization and positive operating leverage. Employee attrition should come in control over next few quarters. We expect revenue CAGR of 14.2% over FY22-24E, with average EBIT margin of 18.6%.
Outlook
Valuation remains attractive as it trades at PE of 14.7x on FY24E EPS. We maintain BUY Rating on the stock with revised target price of Rs 1,140/share at 18x on FY24E.
More Info
At 11:21 hrs HCL Technologies was quoting at Rs 920.30, down Rs 7.75, or 0.84 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 253,037 shares, compared to its thirty day average of 125,940 shares, an increase of 100.92 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 925.00 on 24 September, 2021 and 12 July, 2022, respectively.
Currently, it is trading 33.17 percent below its 52-week high and 0.51 percent above its 52-week low.
Market capitalisation stands at Rs 249,738.60 crore.
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