Hold HCL Technologies, target price Rs 1144: ICICI Securities

ICICI Securities has hold call on HCL Technologies with a target price of Rs 1144. The current market price of HCL Technologies is Rs 1139.25.

HCL Technologies, incorporated in the year 1991, is a Large Cap company (having a market cap of Rs 308910.07 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-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 26960.00 Crore, up 8.18 % from last quarter Total Income of Rs 24922.00 Crore and up 19.37 % from last year same quarter Total Income of Rs 22586.00 Crore. Company has reported net profit after tax of Rs 4096.00 Crore in latest quarter.

The company’s top management includes Ms.Roshni Nadar Malhotra, Ms.Vanitha Narayanan, Mr.Simon 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.R Srinivasan, Mr.Shikhar Malhotra, Mr.Shiv Nadar, Mr.C Vijayakumar. Company has B S R & Co. LLP as its auditors. As on 31-12-2022, the company has a total of 271 Crore shares outstanding.

Investment Rationale
Product & platform (P&P) business growth will remain a key drag on HCL Technologies’ (HCLT) overall revenue growth in the coming years, as per the brokerage's view. After the 4% decline expected in FY23E in USD terms, we expect revenues to shrink by 2%in FY24E before recovering to 5% growth in FY25E/FY26E.

ICICI Securities' believe products like Lotus Notes and Domino are at the end of their lifecycle (‘sunset products’) and are facing stiff competition in their end markets from MS Office and Google. As a result of weak growth, the brokerage expects the P&P business contribution to overall revenues to decline from 11% in FY23E to 8% by FY26E.

Promoter/FII Holdings
Promoters held 60.72 per cent stake in the company as of 31-Dec-2022, while FIIs owned 18.29 per cent, DIIs 15.77 per cent.