MOSL: HCL TECHNOLOGIES (Neutral)-HCL Analyst Meet – Organic momentum steady, software acquisition absorbed
HCL TECHNOLOGIES: HCL Analyst Meet – Organic momentum steady, software acquisition absorbed
(HCLT IN, Mkt Cap USD22.2b, CMP INR1159, TP INR1250, 8% Upside, Neutral)
We attended HCL Technologies’ (HCLT) analyst day, where management shared the outlook on industry and also highlighted opportunities/challenges in the key business segments. Key takeaways:
Company performance
- Over FY17-19, HCL delivered a CAGR of 12% (in CC) in revenue, 14.2% in EBITDA, 17% in cash EPS (i.e. OCF before CWC) and 8% in normal EPS.
- The company guided for revenue growth of 15-17% YoY CC and EBIT margin of 18.5-19.5% in FY20. IBM acquisition is expected to contribute USD180m to EBIT in FY20 (30% EBIT margin).
- Mode 1 continues facing competitive pressure, which is affecting its margins. Ongoing investment phase for Mode 2 would improve margins, as growth momentum continues and automation is leveraged.
HCL Technologies is a global IT services company working with clients in the areas that impact and redefine the core of their businesses. Co. focuses on 'transformational outsourcing', underlined by innovation and value creation, offering an integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and Business services. Co. leverages its extensive global offshore infrastructure and network of offices in 31 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Consumer Services, Public Services and Healthcare & Life sciences.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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