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IDBI Capital Report
HCLTech Ltd.'s Q2 FY25 revenue beats the street's estimates. The growth was broad-based, mainly driven by manufacturing, telecom, retail and technology across geos (USA/Europe) except rest of world. We have seen some pressure on financial services due to recent divestment to State street.
Company is in line with their three-year strategy road map. Deal total contract value during the quarter stood at $2.2 billion, a mix of small/large deals. Majority of the deal wins are embedded with full stack AI capabilities. Management indicated that improved demand environment as compared to the last year led to higher discretionary spends in FY25 mainly driven by BFSI/TMT.
Management revised its full year guidance to 3.5%-5% YoY revenue growth with 50 bps increment at lower end & 18-19% margins on the back of operational efficiency.
Hence, we assume coverage of the stock with a target price of Rs 1,950 (28 times FY26E EPS), with a Hold rating on the stock with a limited upside potential as the stock has rallied in the recent past.
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