Hold HCL Tech; target of Rs 1200: Axis Securities

Axis Securities report on HCL Tech

In Q1FY24, HCL Tech Ltd (HCLT) reported revenue of Rs 26,296 Cr, down 1.2% QoQ and below our expectations. The company’s operating profit stood at Rs 4,460 Cr, reporting a de-growth of 7.8% on a QoQ basis. Missing our expectations, the company’s operating margins, too, declined by 110bps to 17%, which was largely led by higher operating expenses and higher onsite expenses during the quarter. Its net profit for Q1FY24 stood at Rs 3,534 Cr, registering a de-growth of 11.3% QoQ.

Outlook

We recommend a HOLD rating on the stock and assign a 17x P/E multiple to its FY25E earnings of Rs 71.9/share to arrive at a TP of Rs 1,200/share, implying an upside of 8% from the CMP.