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Dolat Capital Report
HCLTech Ltd. reported revenue of $3,445 million, up 1.6% in constant currency (our estimate: 0.8%) despite 90 basis points state street divest impact. IT/ER&D/software grew 1.8%/1.1%/1.4% QoQ.
Operating profit margin expanded by 150 bps to 18.5% mainly due to operating leverage more prominent in Software biz.
HCLTech has narrowed its growth guidance to 3.5-5% (earlier 3- 5%) CC for FY25E, implying 0-2% compound quarterly growth rate for Q3/Q4, while operating profit margin is retained at 18-19%. Management pointed it is seeing pick-up in business momentum but remained conservative owing to macro situation.
We inch up our FY25/26 earnings per share estimates by +1%/1.6% on account of strong Q2 beat and healthy commentary. Citing improved growth confidence, we increase our target price to Rs 2,000 (earlier Rs 1,670) valuing at 27 times of FY27E and revise the rating to ‘Accumulate’.
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