Sharekhan has given Buy recommendation for HCL Technologies with a target price of Rs. 1200 in its research report issued on Apr 23, 2021
Sharekhan’s research report on HCL Technologies
Q4 numbers missed headline estimates; but deal bookings, employee additions and healthy cash generation remained impressive; EBIT margins shrunk by 260 bps q-o-q owing to a wage hike and a seasonal decline in the product business. The management guided for a double-digit revenue growth on CC terms (versus our estimates of 10-12%) and OPM of 19-21% (versus our expectations of 20-21%). Margin likely to be affected owing to investments in geographies, capabilities and talents. Expect strong double-digit revenue growth in FY2022 despite lower growth in product business, driven by robust deal wins, deal pipeline and rising spends on transformation initiatives by clients.
We maintain a Buy rating on HCL Technologies with a revised PT of Rs. 1,200, given clients’ rising spends on Cloud-related technologies and reasonable valuations.