HCL Tech Q1 Results Review - Much Depends On A H2 Bounce Back: Nirmal Bang

Nirmal Bang Report

Key Points

• HCL Technologies Ltd., which has missed guidance a few times in the recent past, is betting on a strong H2 FY24 recovery to deliver on the retained guidance for FY24 after a miss on both revenue and margins in Q1 FY24. Not only is it expecting verticals showing momentum to stay the course but expects laggards like hi-tech and telecom to improve as well.

• Post results, HCL Tech announced an auto engineering services related acquisition in Germany, which we believe will add ~$50 million to revenue in Q2 FY24. The low valuation of 1.25 times-1.45 times to 12-month forward sales implies it is perhaps margin dilutive.

• We have tweaked our estimates based on Q1 FY24 and the acquisition, leading to minor changes in earnings per share for FY24-FY26. We roll forward our valuation to June 2025 EPS while keeping our target price-to-earning multiple constant at 14.5 times, leading to a target price of Rs 975.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.