HSBC puts 'overweight' on HCL Technologies

RESEARCH: HSBC

RATING: OVERWEIGHT

CMP: Rs 387

HSBC has an `Overweight’ rating on HCL Technologies with a target price or Rs 445. The positive outlook on HCL is driven by its well-diversified revenue profile and success in the infrastructure management market. The company has been winning mega deals providing strong visibility to its forward revenues.

HCL is currently trading at about 32% discount to Infosys on FY12E earnings, and this discount is to shrink to about 25%. Under the HSBC research model, for stocks with a volatility indicator, the `Neutral’ band is 10 percentage points above and below the hurdle rate for India stocks of 10.5%. For HCL, this translates into a Neutral band of 0.5-20.5% around the current share price.