HCL Tech Limited Q1 FY22 – Earning Analysis – Globe Capital
17-Nov-2021
HCL Tech Limited Q1 FY22 – Earning Analysis

At the CMP of Rs. 1000, the stock is trading at full year ttm P/E multiple of 23.8 times with the ttm EPS of Rs 41.10 per share.

Q1FY22 Overview and Verdict
CMP
Rs. 1000
Verdict
Beats Estimates

At the CMP of Rs. 1000, the stock is trading at full year ttm P/E multiple of 23.8 times with the ttm EPS of Rs 41.10 per share.

The Company has reported nearly threefold jumped in net profits over the preceding quarter to Rs 3,205 crore in the April-June period.

The company’s revenue increased 2% sequentially to Rs 20,068 crore.

Margin expanded to 19.6% from 16.70%.

EBIT rose 20% to Rs 3,934 crore.

Declared an interim dividend of Rs 6 per equity share

IT and business services revenue rose 0.3% to $1,947 million.

Engineering and R&D services revenue increased 4.3% to $417 million.

Products & platforms revenue was down 1% to $355 million.

Appointed Shiv Nadar as Chairman Emeritus and strategic advisor to the board

Appointed C Vijayakumar, President and Chief Executive Officer, as the Managing Director

Future Guidance:

The Company has maintained its revenue and EBIT margin guidance for the ongoing fiscal. It expects revenue to grow in double digits in constant currency in FY22, while EBIT margin is forecast to be between 19.0% and 21.0%.

Management Takeaways:

The company has won eight large services deals and four significant product deals across the industry verticals of oil and gas, financial services and technology in the April-June quarter.

The Company has posted 11.7% year-on-year revenue growth in constant currency and 29% YoY growth in Mode 2 services in constant currency headlined by cloud and digital transformation deals. The management is remain very confident of a good quarter-on-quarter growth for the rest of this year, enabled by 37% YoY growth in bookings and 7,500+ net hiring this quarter.

IT services attrition (on last 12 months basis) stood at 11.8% versus 14.6% a year earlier and 9.9% as of March 2021. The drop in attrition was due to increased employee engagement initiatives and large-scale upskilling programmes.

Total headcount at 1.76 lakh; net addition of 7,522 employees during the reported quarter.

Mr. Shiv Nadar has resigned as the Managing Director as well as the Director of the company effective July 19. However, he has been appointed as chairman emeritus and strategic advisor to the board for a term of five years with effect from July 20.

Disclosure

Globe Capital Market Limited (“GCML”) is a Stock Broker registered with BSE, NSE and MSEI in all the major segments viz. Capital, F & O and CDS segments. GCML is also a Depository Participant and registered with both the Depositories viz. CDSL and NSDL. Further, GCML is a SEBI registered Portfolio Manager. GCML includes subsidiaries, group and associate companies, promoters, directors, employees and affiliates.

Globe Commodities Limited, Globe Derivatives and Securities Limited & Globe Fincap Limited are subsidiaries of GCML. Rolex Finvest Private Limited, A to Z Consultants Private Limited, A to Z Venture Capital Limited, M. Agarwal Stock Brokers Private Limited, A M Share Brokers Private Limited, Shri Adinath Advertising Company Pvt. Ltd., Orient Land base Private Limited, Bolt Synthetic Private Limited, Price ponder Private Limited and Lakshya Impex Private Limited  are associates of GCML. Globe Comex International DMCC is step down subsidiary of GCML.

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