iifl-logo-icon 1
IIFL

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

HCL Technologies: Strong end to FY24, bodes well for FY25 growth

15 Feb 2024 , 12:41 PM

Analysts of IIFL Securities hosted the management of HCL Tech (HCLT) at IIFL’s Investor Conference in Mumbai. Management sounded confident of maintaining top quartile growth in its services business in FY25, however, decision-making on discretionary spends by clients still remains stretched. HCLT has started seeing green shoots in ER&D. HCLT has been able to increase margins over the last two quarters, despite investments in headcount and large deal ramp ups. Management is confident of meeting its FY24 Ebit margin guidance of 18-19% and continues to aspire to go back to 19-20% margin over the medium-term. Analysts of IIFL Securities forecast 8%/9% USD revenue/EPS Cagr over FY24-26. With the stock trading at 26x/24x FY25/FY26 P/E, risk reward is balanced. Maintain ADD. 

Confident of sustaining top quartile growth in FY25: 

Given the strong exit rate, improving ER&D demand and healthy order book/pipeline, HCLT is confident of sustaining top quartile growth for its Services business. However, in terms of discretionary spend there is little change to the overall demand environment and initial indications of CY24 technology budgets by and large are flat YoY. Management believes the GCC cycle is taking off, which could take away some share from service providers, however this is likely to be cyclical like it has been in the past. 

Longer-term Ebit margin aspiration remains 19-20%: 

HCLT is confident of meeting its FY24 Ebit margin guidance of 18-19%, despite the investments and large deal ramp ups. HCLT was the only large cap IT Company to see sequential headcount increase in Q3. Over the mediumterm, employee pyramid rationalization, productivity benefits, operating leverage from revenue growth and automation are likely to take margins back to the 19-20% range. 

GenAI incrementally becoming part of every deal: 

HCLT highlighted that with every passing quarter, GenAI is increasingly becoming part of every deal. However, given the requirement of data to be structured to effectively deploy GenAI, the initial work that will come for IT services will be around data, which in itself will be a large opportunity. HCLT is seeing traction across sectors on GenAI, however Financial Services and Life Sciences are seeing the highest number of use cases.

Related Tags

  • HCL Technologies
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More
Knowledge Centerplus
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Knowledge Centerplus

Follow us on

facebooktwitterrssyoutubeinstagramlinkedin

2024, IIFL Securities Ltd. All Rights Reserved

ATTENTION INVESTORS
  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.

closeIcon

Get better recommendations & make better investments

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp