Even as shares from the IT sector continue their slowdown and there remains lingering worries for the sector, many brokerages are bullish on HCL Tech. The company recently declared its quarterly numbers and most of the recommendations are based in light of the numbers. Let us see what some of the brokerages say on HCL Tech and why it remains a favorite.
Motilal Oswal has set a price target of Rs 960 on the stock of HCL Tech, as against the current market price of Rs 850.
"After moderating our FY19 revenue estimate by 2% and FY18/19 earnings estimates by 3.8 per cent each (stronger INR), we expect USD revenue CAGR of 9. 4% and earnings CAGR of 8.2% over FY17-19. The stock trades at 13.6/12.4x FY18/19E EPS.
Our price target of Rs 960 discounts FY19E earnings by 14x, implying 15% upside. While we remain Buy on depressed valuations, triggers in the near term are limited. Any potential surprise from a series of new investments in last few years will have some gestation, if we were to go by the company's FY18 revenue guidance," the Motilal Oswal has said in its research report.
Brokerage firm ICICI Direct has revised its target on HCL Tech to Rs 930, as against the current market price of Rs 850.
According to a ICICI Direct report, going ahead, the management expects to enhance its capabilities in Mode 2 and 3 services helping it to deliver industry leading growth. The brokerage firm expects a healthy EBIT margins to be 19.9 per cent to 20 per cent in FY18E, FY19E.
"We expect HCL Tech to report revenue, Profit After Tax CAGR of 9.3%, 4.0% in FY17-19E. We have rolled over our valuation to FY19E with a HOLD recommendation and a revised target price of Rs 930 (14x FY19 EPS), " the firm has said in its research report.
Reliance Securities noted that HCL Technologies (HCLT) reported strong revenue growth of 3.8% QoQ in constant currency terms in 4QFY17, while USD revenue growth came in at a healthy 4.1% QoQ to US$1,817mn.
"Valuation at 12.9x/11.5x FY18E/FY19E EPS also leaves room on the table for investors. We retain our BUY rating on HCL Tech, with an unchanged target price of Rs 963, based on 14x average FY18E and FY19E EPS," the firm has said in its research report.
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