HCL Technologies: A Good Buy for September

HCL Technologies, the Indian multinational IT Services Company, outperformed the market expectations in the first quarter of the financial year 2017. The Company surpassed the estimates made by the analysts and reported 14.8 per cent Y-o-Y growth and 6.3 per cent Q-o-Q growth in the quarter ended 30th June where the net profit was at Rs 2,047 crores, higher than the projection of Rs 1,892.70 crores.

The fourth largest IT exporter had reported a net profit of Rs 1,926 crores in the previous quarter. It reported total revenues of Rs 11,336 crores, up 6 per cent quarter on quarter (QoQ) and 15.9 per cent on a year-on-year (YoY) basis.

A quick Overview of Q1 FY17 

• Revenue at Rs 11,336 crores; up 6.0 per cent QoQ & 15.9 per cent YoY
• Net Income at Rs 2,047 crores; up 6.3 per cent QoQ & 14.8 per cent YoY
• Revenue in constant currency up 6.0 per cent QoQ & 11.2 per cent YoY
• Revenue at USD 1,691 mn; up 6.5 per cent QoQ & 10.0% YoY
• Net Income at USD 305 mn; up 7.1 per cent QoQ & 9.5% YoY

Key catalysts for growth 

Last Twelve Months (LTM) year on year revenue growth in constant currency

• Revenue of the Company grew by 10.7 per cent.
• Broad based growth was recorded across all revenue segments:
• Americas and Europe grew by 13.7 per cent and 10.6 per cent respectively.
• Driven by Infrastructure Services at 18.0 per cent, Engineering and R&D Services at 10.4 per cent, Business
• Services at 10.1 per cent, and Application Services at 4.7 per cent.
• Vertical growth led by Public Services at 24.7 per cent, Lifesciences & Healthcare at 21.5 per cent,
• Telecommunications, Media, Publishing  and Entertainment at 17.8 per cent, Retail and CPG at 14.9 per cent,
• Manufacturing at 7.7 per cent and Financial Services at 5.7 per cent. 



Consolidated Balance Sheet














































Transformational and blue chip customer acquisition
HCL Technologies has signed 13 transformational deals during this quarter, spreading across service lines and industry verticals. The broad–based business wins were driven by next–generation integrated offerings – Next–Gen ITO, BEYONDigital and IoT WoRKS, reflecting investments in Internet of Things, digital technologies, cloud, automation as well as artificial intelligence.



Investment Option 

At CMP of Rs 786.50 HCL Tech share price is trading at a P/E of 17.05, the market cap of the company is 1,11,597.48 crores as of today. Dynamic Levels recommends a buy on HCL at 801 with a target of Rs 855 and a stoploss of 748.