Buy HCL Technologies; target of Rs 960: Motilal Oswal

Motilal Oswal's research report on HCL Technologies

FY17 revenue grew 13.7% CC, of which organic CC growth was 8.7%, as per our calculations. EBIT margin of 20.3% expanded 20bp YoY, and net income of USD 1,216.5m (adjusted for one-time tax reversal) rose 8.9% YoY.

Outlook

The stock trades at 13.6/12.4x FY18/19E EPS. Our price target of INR 960 discounts FY19E earnings by 14x, implying 15% upside. While we remain Buy on depressed valuations, triggers in the near term are limited. Any potential surprise from a series of new investments in last few years will have some gestation, if we were to go by the company’s FY18 revenue guidance.