HCL Technologies Ltd. share price target

Q1 revenue missed estimates largely due to a slowdown in ER&D services and the telecom & media vertical

HCL Tech (HCLT) has reported Q1FY24 revenue at US$3,200mn, down -1.1% QoQ in US$ and down 1.3% QoQ in CC terms below our/consensus estimate of 0%/0.8% QoQ CC growth. Softness in revenue growth was led by decline in ER&D (16% of revenue) by 5.2% QoQ CC, in IT and business services (75% of revenue) by 0.1% QoQ CC and in software products and platforms by 3.1% QoQ CC.

HCL Tech (HCLT) reported its Q4FY23 revenues at US$3,235mn, down 0.3% QoQ in USD and down 1.2% QoQ in CC terms (better than our estimate of -1.9% and consensus at -1.5%). Revenues in CC terms were up 10.5% YoY in Q4FY23.

During the quarter, revenue from operations grew 17.7% y-o-y to INR 2,66,060 million from INR 2,25,970 million in Q4 FY22 and a YoY CC growth of 10.5%.USD Revenue stood at US$ 3,235 Mn, up 8.1% YoY and down 0.3% on a sequential basis.

We recommend a BUY rating on the stock and assign a 17x P/E multiple to its FY25E earnings of Rs 73.10/share to arrive at a TP of Rs 1,245/share, implying an upside of 20% from the CMP.