BNP Paribas Securities has an Outperform call on HCL Technologies with a target price Rs 2,100

BNP Paribas Securities has an outperform call on HCL Technologies with a target price of Rs 2,100. The current market price of HCL Technologies is Rs 1946.4. HCL Technologies, incorporated in 1991, has a market cap of Rs 528337.03 crore, operating in IT Software sector.

HCL Technologies' key products/revenue segments include Software Development Charges and Computer Hardware & Software for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 29318.00 crore, up .54 % from last quarter Total Income of Rs 29160.00 crore and up 8.44% from last year same quarter Total Income of Rs 27037.00 crore. The company has reported net profit after tax of Rs 4237.00 Crore in latest quarter.

The company's top management includes Mr.Shiv Nadar, Ms.Bhavani Balasubramanian, Mr.R Srinivasan, Ms.Vanitha Narayanan, Mr.Simon John England, Dr.Mohan Chellappa, Mr.Deepak Kapoor, Ms.Nishi Vasudeva, Mr.Thomas Sieber, Mr.Subramanian Madhavan, Dr.Sosale Shankara Sastry, Ms.Robin Ann Abrams, Mr.Shikhar Malhotra, Mr.C Vijayakumar, Ms.Roshni Nadar Malhotra, Ms.Lee Fang Chew. Company has B S R & Co. LLP as its auditors. As on 30-09-2024, the company has a total of 271 Crore shares outstanding.


Investment Rationale
According to BNP Paribas Securities, HCL Technologies (HCLT) has made a remarkable journey from being a predominantly infrastructure management company to a well-diversified IT services firm. The brokerage thinks HCLT's diversified service capabilities are still underappreciated, especially its progress in cloud computing. HCL Tech's FY25 revenue growth guidance looks conservative to us. A broad-based growth recovery and guidance raise make BNP Paribas more confident of the growth recovery built into rheir estimates. An attractive dividend yield (c4%), solid execution track record, and strong digital capabilities make HCLT an attractive pick for the IT Services demand recovery.

Valuation methodology
BNP Paribas has given an outperform rating to HCLT with a target price of rs 2,100. It values HCL technologies using DCF methodology, with FY4-11E revenue CAGR of 11.5%, WACC of 10.5% and terminal growth rate of 5%.

Promoter/FII Holdings
Promoters held 60.81 per cent stake in the company as of 30-Sep-2024, while FIIs owned 18.66 per cent, DIIs 15.74 per cent.