Buy HCL Technologies; target of Rs 1276: KRChoksey

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KRChoksey's research report on HCL Technologies

HCL Tech’s Q3 FY18 result was above our estimates in terms of revenue, however, in profitability front it was below our estimates due to increase in non-cash expenditure. Americas has outperformed as far as Geographies are concerned, with a 4.9% qoq growth followed by Europe at 1.7% qoq growth, whereas Asia-Pacific saw a significant decline of 10.5% qoq resulted from a decline in Indian business. Manufacturing and Retail led the growth pack with a 6.3% and 6.4% qoq, wherein the majority of the businesses came on the digital front.

Outlook

We expect the restructuring of DXC technologies would continue to put pressure on margins for the next couple of quarters. We have a “BUY” rating on the stock and we have assigned a multiple of 15x to its FY20E EPS of INR 85.1 to arrive at a price target of INR 1,276, an upside of 31.27% compared to CMP.For all recommendations report, click here

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