HCL Technologies Ltd. share price target

Revenue growth guidance of 3-5% for FY25, likely to be similar to FY24

We recommend a HOLD rating on the stock and assign a 19x P/E multiple to its FY26E earnings of Rs 80.3/share to arrive at a TP of Rs 1,550/share. The TP implies an upside of 5% from the CMP.

HCLT reported revenue growth and EBIT margin in line with our estimates. IT and business services grew 4% QoQ CC and Engineering R&D was down 1.6%. Software business was down 18.5% QoQ CC on seasonal weakness.

HCL Technologies (HCLT) reported weak 4QFY24 performance with 0.3%
QoQ CC consolidated revenue growth, below our estimate of 0.9% QoQ CC.
The weak performance was due to the seasonality in HCL Software (-18.5%
QoQ CC) coupled with weakness in ERS (1.6% QoQ CC), while ITBS posted an
impressive 4% QoQ growth in CC

Recommendation: Global uncertainties leading to delayed spending decisions pose a challenging environment to HCL Tech and will impact its performance in the near term. Moreover, supply-side constraints will take some more time to ease off. Hence, we recommend a HOLD rating on the stock.