HCL TECH LTD

COMPANY PROFILE

Founded in 1976, HCL Technologies Limited (“HCL” or the “HCL Technologies”) is headquarters in Noida, India and provides a range of software services, Business Process Outsourcing (BPO) services, and infrastructure product and management services to its clients in India, the United States, Europe, and in many other geographies. Leveraging its extensive global offshore infrastructure and network of offices in 31 coun- tries, the Company provide holistic, multi-service delivery in industries including Banking and Financial Services (BFSI), manufacturing, consumer services and healthcare. The HCL team comprises 90,000 professionals from diverse nationali- ties. The Company has global strategic alliances with Micro- soft, Cisco, HP, EMC and SAP. 56.9 % of the overall revenue of the Company comes from U.S.,

STOCK INFORMATION

STOCK PRICE

1589.20

TARGET PRICE

1630-1650

SECTOR

COMPUTERS - SOFTWARE

SYMBOL (AT NSE)

HCLTECH

ISIN

INE860A01027

FACE VALUE (IN RS.)

2.00

BSE CODE

532281

STOCK FUNDAMENTALS

MARKET CAP

111,452.22

BOOK VALUE

224.18

EPS - (TTM) (IN RS. CR.)

90.78

P/E

17.48

INDUSTRY P/E

22.74

INVESTMENT RATIONALE

HCL Technologies Ltd signed new deals worth $1 billion TCV during Q1 taking LTM order booking to $4 billion+ (FY14 total was >$5 billion). Noticeably, though this is the eighth consecutive quarter where the company signed deals in excess of $1 billion, con- version rates continue to moderate. We believe, growth rates could taper, going ahead, given the company’s admis- sion of 1) reduced addressable opportunity ($45 billion vs.$60 billion earlier), 2) rising competitive intensity and 3) moderating win rates from historical highs of 25%. Implies winning larger deals is now imperative than ever before to sustain IMS growth acceleration.

SHAREHOLDING PATTERN

HCL TECH IMG

OUTLOOK AND VALUATION

Q1FY15 constant currency growth (CC, 3.2% QoQ) was driven by ER&D services (8.1% QoQ) and infrastructure ser- vices (IMS, 3.6%) with healthy recovery in enterprise system integration (5.1%, likely led by business intelligence, ana- lytics services and Gen2 markets). HCLT signed new deals worth $1 billion TCV during Q1 taking LTM order booking to $4 billion+ (FY14 total to >$5 billion). We continue to believe that HCLT’s current one-year forward PE multiple is inexpen- sive considering it represents a modest 10% premium rela- tive to its five-year (FY09-14) average (12.5x), despite deliv- ering 38% earnings CAGR (25% revenue growth, average 18.2% EBIT margins) over the same period and expected revenue, earnings CAGR of 12% each during FY14- 16E (average 23.1% margins in FY15-16E). Consequently, we con- tinue to value HCLT at 15x FY16E EPS of 113 to arrive at our target price of 1650.

RESULTS (Quarterly )(Rs CR.)
 

SEP' 14

JUN' 14

MAR' 14

DEC' 13

SEP' 13

Sales

4,054.40

4,771.44

4,045.91

3,836.21

3,843.81

Operat- ing profit

1,797.40

2,414.22

1,711.17

1,562.48

1,623.02

Interest

21.49

22.46

19.18

21.54

18.47

Gross profit

2,140.99

2,627.03

1,861.92

1,680.59

1,718.82

EPS (Rs)

23.99

28.33

20.20

18.57

18.50

TECHNICAL VIEW

HCL TECH VIIEW IMG

HCL TECH is looking strong on charts. We advise to buy around 1560-1590 with stop loss of 1520 for the targets of 1630-1650 levels. RSI is also showing upside momentum in it on daily charts.

SYMBOL

VALUE

ACTION

RSI(14)

57.998

BUY

STOCH(9,6)

66.830

BUY

STOCHRSI(14)

100.000

OVERBOUGHT

MACD(12,26)

-25.750

SELL

ADX(14)

38.468

BUY

WILLIAMS %R

-8.146

OVERBOUGHT

CCI(14)

146.9117

BUY

ATR(14)

32.7464

HIGH VOLATILITY

HIGH/LOWS(14)

41.6071

BUY

ULTIMATE OSCILLATOR

61.929

BUY

ROC

2.394

BUY

BULL/BEAR POWER()13

66.3200

BUY

BUY: 8 SELL:1 NEUTRAL: 2

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

HEXAWARE

BUY

202.50

200-202

197

205-208

ONE WEEK

JSW ENERGY

BUY

102.55

101-102

98

104-107

ONE WEEK

KPIT TECH

BUY

204.75

202-205

192

212-222

ONE WEEK

GLENMARK

SELL

752.35

760-780

800

740-720

ONE WEEK

KOTAK BANK

SELL

1240.35

1240-1250

1280

1210-1200

ONE WEEK

Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

RELINFRA

500

SELL

530-550

580

505-470

27000.00

FIRST TGT HIT

494.20 / 475.30

M&M

250

SELL

1260-1280

1300

1240-1220

10000.00

BOTH TGT HIT

1225.80 / 1205.80

LIC HOUSING

1000

SELL

440-445

450

435-428

23000.00

BOTH TGT HIT

422.90 / 378.40

TITAN

1000

SELL

380-385

392

372-362

9000.00

NEAR TGT

376.65 / 374.20

POWER GRID

2000

SELL

136-138

142

132-128

8000.00

FIRST TGT HIT

136.20 / 130.25

MARUTI

125

BUY

3350-3400

3300

3450-3500

-6250.00

SL TRG

3365.30 / 3261.00

NET PROFIT

 

 

 

 

 

70750.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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