Geojit's research report on HCL Technologies
HCL Technologies Ltd (HCL) is into software development and business process outsourcing, as well as providing IT infrastructure services. It has operations in 60 countries, with a client base that includes Fortune 500 and Global 2000 companies. As of end-Q3FY24, the employee count was 224,756. The company delivered muted performance in Q3FY24, with slight increase in topline and margins amid a challenging macroeconomic environment. Consolidated sales grew 6.5% YoY to Rs. 28,446cr (4.3% YoY in constant currency terms), owing to increase in recurring revenue in its software business. EBITDA margin widened 10bps YoY to 23.9%, due to lower discretionary spends and furloughs. In Q3FY24, Company performed far better amongst its top competitors in the IT industry. Order pipeline rose at a tepid pace and remain optimistic on improving margin in the medium term.
Outlook
Hence, we upgrade our rating on the stock from HOLD to BUY, with a roll forward target price of Rs. 1,760 based on 23.5x FY26E adjusted EPS.
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