HCL Technologies Ltd. share price target

HCL Technologies' (HCLT) Q2FY21 revenue growth of 4.5% QoQ in CC was slightly higher than our forecast of +3.9%. However, EBIT margin saw a strong improvement of 110bps to 21.6% (23 quarter high) and was a beat to our forecast. EPS of Rs11.6, +7.5%/+18.5% QoQ/YoY was also beat to our forecast. HCLT has maintained its revenue growth guidance at CQGR of 1.5% to 2.5% in CC for H2FY21, implying 0% to 0.7% YoY growth for FY21. However, it has now guided for EBIT margin 20%-21% for FY21 vs. 19.5%-20.5% earlier. We factor the Q2FY21 beat, FY21 guidance and increase our FY21/22 revenue (US$)...

HCL Tech (HCLT) reported 6.4% QoQ USD growth coming from mid-high single digit recovery across verticals.

HCL Tech announced that it is going to acquire DWS group headquartered in Australia for AU$ 158.2. The deal will likely close till December 2020. HCL Tech has strong a foothold in geographies like North America and Europe

Mid-quarter update raises revenue and margin guidance for Q2FY2021, driven by better-than-expected execution, pick-up in discretionary spends that were held up, and return of normalcy in certain pockets. Given strong capabilities in IMS, HCL Tech would continue to win consolidation deals with...

HCL Tech has announced its intent to acquire DWS Limited (DWS) for Australian $158.2 million (~| 849.2 crore) valuing the company at 0.94x EV/Sales (based on FY20 Sales) and ~21x FY20 EPS. The acquisition is subject to regulatory approvals and is expected completion timeline is by December 2020. The acquisition will add ~1% to company's top line in FY22E and will also help the company in expanding it's presence in Australia and New Zealand. The company will also be able to cross sell and up sell to existing clients of DWS. Although DWS's PAT margins (~4.4%) are lower...

We recommend a BUY on HCL Tech with a Target Price of Rs 795, an upside of ~6% from CMP of Rs. 749 and Stop Loss Rs 700.

Over the period FY16-FY20, HCL Technologies (HCLT) delivered robust double-digit USD revenue growth of 12.4% CAGR (INR revenue CAGR of 14.6%) despite the fact that its peers were posting slower growth. And it did experience a slowdown in Q1FY21 (QoQ decline of 7.4%), the order pipeline and energetic client engagements are suggestive of growth coming back. The management enthused by these recent developments has guided for 1.5-2.5% QoQ constant currency growth for the rest of FY21 and margins are expected in the range of 19.5%-20.5%.