Buy HCL Technologies; target of Rs 1400: Sharekhan

Sharekhan is bullish on HCL Technologies has recommended buy rating on the stock with a target price of Rs 1400 in its research report dated October 12, 2023.

Broker Research

October 13, 2023 / 14:00 IST

Buy

26 Aug, 2025 12:21

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Sharekhan's research report on HCL Technologies

Q2FY24 numbers were healthy with broadly in-line CC revenue growth of 1% q-o-q and beat of 78 bps in EBIT margin at 18.5%. PAT of Rs. 3,832 crore (up 10% q-o-q) was 5% above our estimate. Organic CC revenues grew by 0.5% q-o-q and 0.5% growth was contributed from ASAP acquisition. EBIT margin improvement was led by higher utilization, reduced subcontractor costs and lower discretionary expenses. New deal win TCVs grew strongly by 154% q-o-q to ~$4 billion. However, management lowered its FY24 CC revenue growth (including ASAP acquisition) guidance to 5-6% (versus 6-8% earlier) given H1 performance and maintained an EBIT margin guidance of 18-19%. Revised revenue growth guidance implies 3.3-4.5% CQGR for Q3/Q4 of FY24. Services CC revenue growth to be in 2.6-3.8% range for Q3/Q4 of FY24.

Outlook

We maintain a Buy on HCL Tech with revised PT of Rs. 1,400 (increase in PT reflects rollover of valuation multiple to FY26E EPS) given robust deal wins and reasonable valuation of 19.4x/17.5x FY25E/FY26E EPS.

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