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HCL TECH INVESTMENT CALL


Posted on 2019-01-24 in WEALTH NOTE RESEARCH


HCL TECH INVESTMENT CALL                            CMP - 325                             5 YEAR TARGET – 890

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HCL tech-led by chairman and CEO Shiv Nadar makes 58% of its sales revenue from software services. Plus IT Infrastructure services provide 37% to sales and IT BPO provides only 3% to sales.

 

Out of this 59 % of the profits come from software services and 38% from IT Infra. Only 1% of profits come from the IT BPO.

 The company generates almost 99% of its net income from software services.

 This indicates HCL Tech is more dependant on it's software and IT Infra services for its business.

 Currently, the sector as a whole is in a stabilization mode after seeing reduced revenues after the slowdown in Europe and fear of automation-related changes.

The business seems to have coped up well to the changes and has introduced a good change in business services. We expect the company to pick up in the automation sector as it has started investing heavily in future technologies.

 We expect the company to grow at an average annual growth rate of 22% and us expect the share price to rise to a level of 890 by FY 2024.

 

The stock is also valued attractively at 17 PE, which makes it a good buy for the long term.

 

 







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