HCL Technologies

Dev_S · January 15, 2022, 10:09am

Find HCL tech on much awaited inflection point and Divergence from peers will be accentuated from FY 23 onwards, given their future strategy ( Demand side) and foundational blocks are now in place

Highest QoQ revenue growth among peers, lead indicators of deal wins and hiring suggest brighter times ahead
P&P division overhang should alleviate which is also one reason of valuations discount, this division need to be seen differently from services both on revenue trend( more of YoY game) and margins trajectory ( higher end of 25%+ annual) than services. Also sunset products are pretty much out of way so no baggage, winners to drive clean performance going forward.
Smart move to seperate ER&D and calling out focus “Futuristic” elements - mgmt presentation had Vijay kumar - AR+VR+Metaverse, silicon platforms-Semiconductors (hw and sw),industry 4.0 IoT, Med devices - remote mgmt and so on - listen Mr Vijay Kumar 21:00 onwards

ER&D growth and margin profiles are higher than regular IT services
Between ER&D and P&P - 35% type revenues are high margins and relatively sticky relationships and higher growth ( key strategy difference)
Also in AR 21 - as part of Market growth strategy, focus is higher on Non US geo - results are visible as they are growing well in these geo
Acquisition- selective inorganic growth continues with solid dividend payoutt( 3.5% yeild)
Mgmt was candid about FY21 and 22 being investment heavy and hence margins on lower end of guidance - already negotiating higher pricing ( and higher T&M projects share) and fresher ratio going high should normalize it back in few quarters, Attrition is hitting them alike industry, though they are better off than most( except TCS). Happy to see them chasing growth and right investments.

All in all good quarter and FY 23 onwards see them narrowing valuations gap with TCS and Infy.

Proud to see world dominance by Indian IT services put together, middle class at scale they have built in last 20 years to indirectly drive India consumption growth, they continue to be a strong pillar of society at large and quality of employment opportunities they continue to provide to next generation at volumes that India needs.

Invested in IT as basket, HCL being Highest allocation

Dev_S · February 11, 2022, 3:18pm

Now, this is some buying where both Promoter and KMP/CEO are buying from market in sizable quantities, not symbolic

imsushant · February 12, 2022, 8:01am

Looks like they will probably do a buyback in coming 1-2 quarter at 1500-2000 to improve EPS and other metrics… so these key people are acquiring shares at current price to tender it later.

Contrabets · February 18, 2022, 12:29pm

May be but can be false also because if we see last time buyback was around aug 2018.

Promoter Holding 2017-59.68%
Promoter Holding 2018-60.38%
Promoter Holding 2019-60.18%.

This shows they tend to do but mostly to just use their cash and increase their holdings and this shows that after buyback there was a decrease but still greater than post-acquisition of shares so just by looking at new contracts they can start to play out very soon that can be a reason for buying shares at a premium valuation.

Their new partnership and recent two acquisition can be very good that is right now not on the balance sheet till date.

Dev_S · February 28, 2022, 5:54pm

ER&D leadership credentials testimony from Zinnov , out of top 50 firms.

ER&D is a high margin, high growth area and sticky biz, Players like Tata elxi etc command high valuation as core focus here. This is a high focus and near 20% revenue for HCL.

Rahil_Nanda · March 4, 2022, 8:18am

Sakir_Saiyed · March 13, 2022, 9:53am

Recent Market Purchase by Promotors

Abinesh · May 15, 2022, 5:52pm

In the annual report-2021 (pg:211), independent auditors mentioned that there have been some delays in payment of duty of customs. Do such instances represent any shortcomings in the internal controls of a company? Or could they be just one-off occurrences due to genuine reasons? Thanks in advance

Disclosure: invested

Mudit.Kushalvardhan · July 10, 2022, 5:27pm

There can be many reasons of such delays, Including some regulatory related delays too. Best way is to directly writing to company and asking about the real reasons…

keeyes · July 13, 2022, 8:21am

While the results are not great and along expected lines, the share of ERD segment is growing. The acquisition of Quest may help as well. Product segment continues to be flat.

Summary

HCL technologies in the final stages of acquiring Quest Informatics Pvt Ltd through all cash purchase (15 Cr.). This will enhance it’s capability in the Industrial IoT and aftermarket domains

Notification to the stock exchange can be accessed here

vibhor_vaish · September 27, 2022, 7:28pm

Another sports engagement after Manchester United

HCLTech, a leading global technology company, today
announced it has been named an Official Cornerstone Partner of MetLife Stadium and the official digital
transformation partner of the New York Giants, New York Jets and MetLife StadiumHCLTech, a leading global technology company, today
announced it has been named an Official Cornerstone Partner of MetLife Stadium and the official digital
transformation partner of the New York Giants, New York Jets and MetLife Stadium
https://www.bseindia.com/xml-data/corpfiling/AttachLive/90dca201-a3b5-45b0-947c-db28b154a002.pdf

kartiks · October 10, 2022, 11:11am

Capacity Expansion in Mexico

Employee strength planned for 50% increase in next 2 years in Mexico

6th Technology center to be opened in Mexico from current 5.

HCLTech celebrates 14 years of progress in Mexico | HCLTech

sumitjain0014 · November 16, 2022, 6:09am

Reverse Dcf
I have used terminal multiple of 15 being conservative, Expected ROR 15 percent .
So co need to grow at 12.5 percent for next 10 years to meet investor’s expectations pf 15 percent

paragbharambe · November 16, 2022, 9:11am

Does it take into account that current dividend yield is 4% (approx.) and based on it’s history, it could be double in next 5-6 years.

Chandragupta · November 16, 2022, 3:12pm

DCF model is agnostic to dividend policy. High dividends would imply lower reinvestment in the business, which (in theory at least) would lead to lower free cash flows in future years and so, lower PV. Thus, it all gets in-built into the intrinsic value of the business.

Moreover, in all DCF models, there is an assumption that intermediate cash flows are reinvested at the same rate of return at which discounting is done. This implies the shareholder will reinvest dividends at the same rate of return as what Retained Earnings would earn, and so there is no incremental benefit in getting high dividends (in theory).

keeyes · December 10, 2022, 5:03am

kkarimyusuf · January 22, 2023, 1:33am

Dr.Bharath_Murugavel · April 30, 2024, 8:09am

https://www.hcltech.com/sites/default/files/document/open/quarter-results/2024-04/HCLTech_Q4_FY24_Investor_Release.pdf

Dr.Bharath_Murugavel · April 30, 2024, 8:10am

Business Performance:

Responded to uncertain situation with agility and flexibility.
Delivered good growth with control over profitability.
Annual revenue grew 5% in constant currency year-on-year.
Services business grew 5.4% year-on-year in constant currency.
Software business grew 2.3% year-on-year in constant currency.
Operating margins stood at 18.2%, within guided range.
Free cash flow growth of 27.7% year-on-year.
Healthy growth across segments, industries, and geographies.
Organizational Changes:

Integrated engineering and R&D services sales with IT and business services sales.
Aligned with increasing demand for strategic partners with comprehensive capabilities.
Three leaders with role changes announced for FY’25.
Focus on accelerating growth for engineering business and IT services segment.
Financial Performance:

Q4 revenue at $3.43 billion, up 6% in constant currency year-on-year.
Services revenue at $3.1 billion, up 6.7% year-on-year in constant currency.
IT and business services revenue at $2.55 billion, up 6.7% year-on-year in constant currency.
ER&D revenue up 6.4% year-on-year in constant currency.
EBIT at $603 million, down 48 basis points year-on-year.
Net income at $480 million, flat year-on-year.
Operating cash flow at $2.7 billion, up 22% year-on-year.
Free cash flow at $2.6 billion, up 28% year-on-year.
Client Wins and Partnerships:

Secured deals with Europe-based manufacturing company, Japan-based global medical technology major, US-based manufacturing company, and US-based advertising and marketing technology service provider.
Partnership with State Bank of India for MarTech platform.
Launch of HCLTech AI Force platform for generative AI and automation.
Industry Trends:

Enterprises focusing on AI, engineering, and FinOps.
Moderate to healthy enterprise IT spending expected.
AI-related spending impacting IT budgets.
Growth in engineering and R&D spend outsourcing globally.
Integration of IT and engineering capabilities driving new deal momentum.
Guidance for FY’25:

Revenue growth guided at 3% to 5% in constant currency.
Operating margin guidance at 18% to 19% range.
Expecting year of consolidation on demand and supply side.
Clients expected to invest in AI and other emerging technologies.
Vendor consolidation opportunity to benefit scalable providers.
Challenges and Opportunities:

Cautious optimism amidst enterprise IT spending.
Impact of Generative AI on discretionary spending.
Focus on efficiency and differentiation in software development.
Expectation of continued growth in software and services segments.
Strong pipeline and bookings expected to drive growth.
Conclusion:

Optimistic outlook for FY’25 despite challenges.
Focus on efficiency, differentiation, and client partnerships.
Strong financial performance and strategic initiatives driving growth.
Positioning as a leader in the industry with a balanced portfolio.