HCL Technologies Ltd. share price target

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.

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.

Q4 revenue down 0.3% QoQ CC, below our estimates

HCL Tech witnessed strong revenue growth of 13.1% YoY CC which was led by their Services business which grew 15.4% YoY CC; and strong revenue growth of 5.0% QoQ CC which was led by HCL Software. Constant Currency Revenue was up 5.0% QoQ & up 13.1% YoY. Whereas INR Revenue stood at ? 2,670 Mn, up 19.6% YoY and up 8.2% sequentially. It recorded USD Revenue of US$ 3,244 Mn, up 5.3% QoQ & up 9.0% YoY. Services Revenue (ITBS and ERS) was up 2.2% QoQ & up 15.4% YoY in Constant Currency. Mode-2 Revenue up 27.0% YoY in Constant Currency.