Anand Rathi maintains 'Buy' rating for HCL Technologies , target price ₹9312 min read . Updated: 01 Dec 2020, 07:52 AM IST
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.