Buy HCL Technologies; target of Rs 1398: Prabhudas Lilladher

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

HCLT reported strong beat on revenue with growth of 7.6% QoQ CC (Ple: 4.5%, 4.2%) led by strong growth in Products business (+24.5% QoQ CC) aided by recovery of $20mn slippages in Q2 and seasonal strength in this business in Q3. Revenue guidance of 0-1% YoY CC for Products remains intact indicating steep sequential decline in this business in Q4. ER&D (+8.3% QoQ CC) and IT Services (+4.7% QoQ CC) also reported strong growth. Strong new deal TCV of US$2.135 bn +64% YoY, strong deal pipeline (~10% QoQ, 20% YoY), continued strong headcount addition (+5.4% QoQ, 24% YoY) indicates IT Services and ER&D growth momentum will continue. Miss in EBIT margin at 19.0%, flat QoQ (Ple:19.3%, Cons:19.4%) was led by decline of 190bps QoQ in Services (IT + ER&D) margins due to wage hikes, supply side cost pressures, new project transition costs and seasonal leaves. This was offset by higher P&P margins (32%) led by revenue growth leverage.

We have cut our estimates by -1.7%/-2%/+0.6% for FY22/23/24E led by cut in margin estimates. We estimate revenue growth of 13.1%/13.7%11.6% for FY22/23/24. We arrive at DCF based TP of Rs 1398 (implied target multiple of 21.1x on FY24 EPS). HCLT is currently trading at 23.4x/20.2x on FY23/24E EPS of INR 57.3/66.2 respectively with Revenue/EPS CAGR of 12.6%/16.3% over FY22-24E. Inexpensive valuations relative to the sector, strong TCV and headcount addition led us to maintain our Buy rating.

At 16:00 hrs HCL Technologies was quoting at Rs 1,258.80, down Rs 78.75, or 5.89 percent.

It has touched an intraday high of Rs 1,276.00 and an intraday low of Rs 1,244.00.

It was trading with volumes of 567,053 shares, compared to its thirty day average of 230,852 shares, an increase of 145.63 percent.

In the previous trading session, the share closed up 0.32 percent or Rs 4.30 at Rs 1,337.55.

The share touched its 52-week high Rs 1,377.00 and 52-week low Rs 890.00 on 24 September, 2021 and 24 February, 2021, respectively.

Currently, it is trading 8.58 percent below its 52-week high and 41.44 percent above its 52-week low.

Market capitalisation stands at Rs 341,596.16 crore.

Read More