Dolat Capital Market has given Buy recommendation for HCL Technologies with a target price of Rs. 1140 in its research report issued on Apr 23, 2021
Dolat Capital Market’s research report on HCL Technologies
HCLT reported weak results with revenue growth of 2.5% in CC terms (DE 3.3%) and OPM at 16.6% (DE: 19.8%). Results performance was affected by weak revenues, impairment impact of $16mn in P&P segment. Guided strong revenue growth for FY22 with base growth of double-digit, which along with strong TCV data (Net New TCV at $7.3bn in FY21 – up 18% growth) implies potential for much wider growth print for the year. OPM guidance stood at 19%-21% is bit disappointing. Management has factored in some bit normalisation of discretionary cost savings and need for investments in new Geos and Mode 2 Digital offerings in the Engg Services as reason for the wider/lower band.
We believe strong double digit organic growth guidance backed by strong TCV/Pipeline, along with much improved FCF profile makes a strong case of re-rating of the stock and thus we maintain HCLT as our Top Pick with TP of Rs1,140 valued at 20x on FY23E earnings.