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Dolat Capital Report
HCLTech Ltd. posted decline of 1.6% in constant curreny terms (our estimate: -2%) due to seasonally soft quarter for manufacturing, off-shoring impact in financial services and decline in ER&D. IT/ER&D declined 1.5%/3.5%, while software business grew +0.4% QoQ. Operating profit margin dipped 50 bps to 17.1%.
The company has retained its 3-5% CC growth guidance for FY25E, along with OPM band at 18-19%. View on demand is improving, but management remains non-committal at this point. However, we are confident on sequential growth in Q2 (despite 80 bps headwind from divestiture) that too across vertical (ex-FS).
We retain our growth/Ebit estimates post Q1, while slightly tweak our FY25/26 EPS estimates by +2.6% (due to one-time gain)/-0.6%.
Maintain ‘Accumulate' rating with target price of Rs 1,610 valuing at 24 times of FY26E.
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