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Home >Markets >Stock Markets >Anand Rathi maintains 'Buy' rating for HCL Technologies , target price 931
Brokerage sees an upside of 13% in HCL Technologies stock.
Brokerage sees an upside of 13% in HCL Technologies stock.

Anand Rathi maintains 'Buy' rating for HCL Technologies , target price 931

On profitability front, HCL Tech reported an improved EBITDA from operations for the quarter by 20.2% year-on-year at 42,590 million with a margin of 26.6%.

HCL Technologies reported good set of numbers for the quarter under review. Revenue from operations improved by 6.1% year-on-year to 1,85,940 million on a reported basis. The company reported healthy revenue growth mainly led by better performance in rest of the World (geographically). Mode-1 (63.3% of revenue)/Mode-2 (20.9%)/Mode-3 (15.8%) grew by 4.3/6.9/2.1% QoQ in constant currency (CC) terms respectively. Analysts at Anand Rathi believes, overall, the results were above their expectations. They maintain BUY rating on the stock with a target price of 931 per share.

Last closing price of HCL Technologies on Friday was 823, thus, the brokerage sees an upside of 13% in the stock.

Here is what the report says about HCL Technologies:

> Products and platforms segment (13.5% of revenue) led grew during for the quarter with 3.1% QoQ and 16.2% YoY growth in CC terms. Among verticals,Technology & Services (6.3% QoQ and 12.8% YoY) and Lifesciences & Healthcare (8.6% QoQ and 9.2% YoY) led the growth.

> On profitability front, the EBITDA from operations for the quarter improved by 20.2% year-on-year at 42,590 million with a margin of 26.6%.

> The company achieved the reported PAT of 31,430 million, a growth of 15.9% year-on-year with a net margin of 16.9% translating into EPS of 11.58 per share for the quarter.

> The company signed 15 transformational deals during the quarter for another straight quarter driven by life sciences & healthcare, public services (energy & utilities) and manufacturing. The management said bookings in Q2FY21 are similar to the same quarter last year, and is 35% higher than the last quarter.

> From a pipeline perspective, the company is witnessing good deal creation activity across all verticals and geographies & also witnessing good momentum in the digital foundation, and the transformation opportunities. Q2FY21 pipeline grew by 20% QoQ and currently it stands at an alltime high. The company has revised revenue and margin guidance upwards.

> Constant currency revenue guidance for Q3 and Q4 is expected to be in the range of 1.5% to 2.5% on an average basis. EBIT guidance stands revised upwards to 20% to 21%. The management has doubled dividend policy to 4 per share quarter.

> With continuity of robust growth across Mode-2 and Mode-3 business (36.7% of revenue combined), we expect the growth momentum to continue in the near term supported by strong deal pipeline and ramp up of large deals.

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