HCL Technologies Ltd. share price target

We recommend a BUY on HCL Tech with a Target Price of Rs 600, an upside of ~7% from CMP of Rs. 562 and Stop Loss Rs 530.

HCL offers its services and products through three business units - IT and Business Services (ITBS), Engineering and R&D; Services (ERS) and Products & Platforms (P&P;). ITBS enables global enterprises to transform their businesses through offerings in areas of Applications, Infrastructure, Digital Process Operations and next generational digital transformation solutions.ERS offers engineering services and solutions in all aspects of product development and platform engineering. Under P&P;, HCL provides modernized software products to global clients for their technology and industry-specific requirements...

Revenue up 0.8% in CC thanks to 7% growth in Mode 2 services, above estimates Consolidated revenue for the quarter in rupee terms was up by 2%QoQ to Rs 18587 crore (from Rs 18135 crore in quarter ended Dec 2019). Higher revenue for the quarter was largely due to 3% growth in revenue of ITBS (IT & business services) as well as 2% growth in revenue of P&P; (Products & Platforms). While the revenue of ITBS stood higher at Rs 13130 crore that of P&P; stood at Rs 2417 crore for the quarter. Meanwhile the revenue of Engineering and R&D; was flat...

7.1% in c/c, aiding healthy 1.6% growth in IT services. Products revenues were flat (-0.1% QoQ growth) while ER&D; services declined by 1.8% QoQ. IBM business added US$160mn in Q4FY20. EBIT margin at 20.9% was up 70 bps QoQ aided by one-off improvement in Mode 2 margins, rupee depreciation (50...

In the near term, the company expects revenue pressure in terms of pricing discount in impacted verticals (like retail, oil& gas, manufacturing), reduction in volume-based billing and deferral of discretionary spend in B2B business. HCL Tech has won 14 transformational deals in Q4FY20, which could see a ramp up in Q2FY21E. Since this is coupled with improved deal wins from Q2FY21E, we expect the company to see an improved revenue trajectory from H2FY21E. In the post Covid-19 world, the company could see improved traction in cloud consumption, cyber securities, automation. In turn, this...

HCLT reported 0.8% QoQ growth in CC terms (our estimate: 1.4%) led by 7.1% QoQ growth in Mode 2 covering up for 0.4%/1% QoQ decline in Mode 1/Mode 3. OPM improved by 60bps to 20.9% (DE: 20.3%) driven...

HCLT reported 0.8% QoQ growth in CC terms (our estimate: 1.4%) led by 7.1% QoQ growth in Mode 2 covering up for 0.4%/1% QoQ decline in Mode 1/Mode 3. OPM improved by 60bps to 20.9% (DE: 20.3%) driven...

HCL Technologies' (HCLT) Q4FY20 revenue growth of 0.8% QoQ in CC was in-line with our forecast. EBIT margin of 20.9%, +65bps QoQ, was higher than our forecast of 19.8%. Further, EPS of Rs11.6, +3.7%/+22.7% was also beat to our forecast. Given the uncertainties due the Covid-19 pandemic HCLT suspended giving annual guidance, in line with our expectation. While it expects severe impact for Q1FY21, it expects stability in Q2 and pick-up in growth from Q3 onwards. We largely maintain our FY21/22E revenue but increase EBIT margin by 100bps/175bps to 18.8%/19.9%. We also increase FY21/22E EPS by 3.6%/6.6%. However, given the...

HCL Technologies Ltd (HCLT) reported strong set of numbers in Q4 FY20. Revenue stood at Rs. 18,590 crs up 16.3% YoY and 2.5% QoQ. Operating profit showed a growth of 5.8% QoQ at Rs. 3,881crs while operating margin exceeded guided range of 19%-19.5% at 19.6% showing growth of 60 bps.

HCL Tech (HCLT) ended FY20 on a strong note with 0.8% QoQ CC and 13.4% YoY CC topline growth and five-year-high EBIT margins of 20.9% in Q4FY20.