Hold HCL Technologies; target of Rs 1525: Way2Wealth

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Way2Wealth's research report on HCL Technologies

"HCL Technologies (HCL) declared its Q2FY14 results. Though the result was much balanced as compared to its previous performances, but kink towards the IMS continues. Street is very much divided on the prospect of the HCL going forward; Some are positive on the return of comparative balanced growth to the company and believe that HCL is very well positioned to capture the incremental demand in the industry; whereas some are feeling, most of the operating metrics of HCLT are very stretched and further improvement from the current levels would very difficult to justify the already expanded valuations. We try to analyze each and every positives and negatives to come out with an unambiguous conclusion about the company's future prospects."

"At the current market price of Rs 1461, HCL Technologies is trading at 15x of FY15E EPS of Rs 96. We are reiterating our HOLD target on the stock with a target price of Rs 1525 after discounting FY15E EPS by 16x. Based on the continuous under performance in the core software segment, we believe, the company became over-dependent on a single service line and hence not feeling comfortable to increase our valuation multiple further," says Way2Wealth research report.

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