Buy HCL Technologies; target of Rs 2300: Motilal Oswal

Motilal Oswal's research report on HCL Technologies

HCL Technologies (HCLT) reported a muscular 2QFY25, with revenue of USD3.4b, up 1.6% QoQ (~2.5% organic) and 6.2% YoY in constant currency (CC), above our estimate of flat revenue growth. EBIT margins came in at 18.6%, beating our estimate of 17.4%. New deal TCV stood at USD 2.2b (up 13% QoQ) in 2QFY25. For FY25, HCLT revised the lower end of its growth guidance to 3.5%-5% YoY in CC from 3%-5% earlier. For 1HFY25, revenue/EBIT/PAT grew 7.5%/8.1%/15.3% compared to 1HFY24.

Outlook

We expect HCLT to deliver a CAGR of 8.4%/11.5% in USD revenue/INR PAT over FY25-27E. We raise our EPS estimates by 2.4%/2.7%/3.4% for FY25/FY26/FY27 as we factor in the 2Q performance and a recovery in discretionary spending in 2HFY25/FY26E. Reiterate BUY with a TP of INR2,300 (based on 30x Sep’26E EPS).