Sharekhan has given Buy recommendation for HCL Technologies with a target price of Rs. 1400 in its research report issued on Apr 21, 2022
Sharekhan’s research report on HCL Technologies
Q4FY22 revenue growth was modest as revenues of product business fell sharply, but profitability remained in line with expectations. Order bookings, robust hiring, client additions, dividend payout and cash flow conversion remained impressive. The management provided revenue growth guidance of 12-14% on CC terms for FY2023, better than our expectations. The company guided EBIT margin in the band of 18-20% for FY2023, in line with our expectations. Services business (IT services + ERS) growth is expected to remain strong in FY2023 on the back of healthy deal intake, headcount addition and healthy client metrics. We expect the company’s margins to remain under pressure in FY2023 given a supply-side crunch, wage inflation and investments in building capabilities.
We maintain a Buy on HCL Technologies with a revised PT of Rs. 1400, given strength in the services business, higher dividend payout, healthy order intake and reasonable valuation.