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IDBI Capital Report
HCLTech Ltd.'s Q1 FY25 was in-line with consensus. Management is confident on achieving FY25E revenue growth guidance of 3%-5% YoY and 18-19% margins on strong deal momentum and operational efficiency. However, company has also re-iterated the macro situation to be same as FY24.
Profit after tax for next quarter will be higher led by positive impact of state street joint venture on other income by $100 illiomn. Management expects Q2 FY25 to be weak (on revenue front) due to impact of large deal ramp down. Furthermore, Q3 to be the strongest quarter (positive seasonality) would provide support to growth for FY25.
HCL's strong portfolio in the Gen AI, ISV ecosystem, Infra, ERS and improving operational efficiency prompts us to maintain 4% YoY growth for FY25E.
We have upgraded our target price to Rs 1,562 (22 times FY26E EPS) versus Rs 1,410 and maintain our Hold rating on the stock.
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