"Though the Q1FY2015 guidance appears soft, the management's confidence on the growth acceleration in FY2015 driven by strong deal wins and a positive margin outlook, gives comfort on the improving earnings predictability for FY2015E and FY2016E. We have broadly maintained our earnings estimates. The stock trades at 15.9x and 14.2x FY2015E and FY2016E earnings estimates. We retain our Buy rating on the stock with a price target of Rs650," the firm has said while recommending the stock of Wipro.
For HCL Tech, the firm said, "HCL Technologies has delivered another strong quarterly performance with a 100-BPS improvement in the EBIT margin to 24.7 per cent (closer to Infosys' margin of 25.5 per cent). The revenues grew by 3 per cent QoQ to $1,361 million, with the growth remaining broad-based. The IT services business grew by 2 per cent QoQ and the IMS business grew by 5.2 per cent QoQ. The other income rose by 21.5 per cent QoQ and the forex losses fell by 10 per cent QoQ. The net income for the quarter increased by 8.6 per cent QoQ to Rs1,624 crore.
"The company has delivered on its commitments of a broad-based revenue growth and a continual improvement in the margin (up 520BPS YoY, the highest among the top four IT companies). We maintain our positive stance on the company, given its strong earnings predictability and reasonable valuation. At the current level, the stock trades at of 12.5x FY2016E earnings. We maintain our Buy rating on the stock with a price target of Rs1,700."