India Equity Research | IT Services

May 07, 2020

Result Review

HCL Technologies Ltd

CMP Target Price
Rs 512 Rs 642
Improving biz mix, margin profile; retain Jun 2021

LONG
Rating Upside
LONG 25% ()

Estimate Revision
➢ For 4QFY20, HCLT posted strong revenues (+0.8% qoq in CC terms, in line with EE led
Forecasts % Change
by Mode 2 business) and margins (+64bps qoq, 88bps above EE led by better Mode 2-
(Rs mn) FY21E FY22E FY21E FY22E
3 margins). Cash conversion at 112% (OCF/NI) for FY20 was also robust.
Sales 7,42,675 8,22,906 -4% -3%
➢ HCLT refrained from providing any guidance, but commentary was strong led by a large
EBITDA 1,45,614 1,67,766 0% 3%
deal pipeline, strong client mining, solid cash conversion and an improved product mix.
While 1H may remain subdued, good growth could be visible from 2H. PAT 1,12,100 1,31,075 -7% -5%
EPS 41.3 48.3 -7% -5%
➢ 1H margins would remain subdued led by lower utilisations, lower billing and discounts.
➢ We pare estimates to bake in the COVID-19 impact while maintaining LONG on the Stock Information
stock with a Jun’21 TP of Rs 642 (Rs 675 earlier) set at 15x (unchanged) Jun’21 TTM Market Cap (Rs Mn) 13,88,718
EPS of Rs 42.8 (Rs 44.5; Mar’21). 52 Wk H/L (Rs) 624/375
Avg Daily Volume (1yr) 45,30,591
Technology/IT & Business Svcs/Americas drive growth: US$ revenues were flat qoq/up
Avg Daily Value (Rs Mn) 31.5
11.7% yoy to US$ 2,543mn (matching EE), while CC revenues grew 0.8% qoq/13.5% yoy.
Organic growth was 6% yoy in CC terms. CC qoq growth was driven by the US (1.3% qoq Equity Cap (Rs Mn) 626
CC) and RoW (0.9%) while Europe (-0.1%) was soft. In segments, IT&BS (1.6%) led; P&P Face Value (Rs) 2
(-0.1%) was soft while ER&D services (-1.8%) was weak. Vertical-wise, Tech (7.2% qoq), Share Outstanding (Mn) 2,713.7
Public Svcs (2.9%) and LS&HC (2.3%) led; Retail (0.3%) and Mfg. (-0.2%) were soft whereas Bloomberg Code HCLT IN
FS (-1.1%) and TMP&E (-6.6%) were weak. HCLT expects weakness in manufacturing
Ind Benchmark BSE IT
(aerospace, auto) and Entertainment; FS, Telecom, LS & HC and Tech were less impacted.
While HCLT has suspended guidance in wake of COVID-19, OB stayed robust; 14 new Ownership (%) Recent 3M 12M
transformational deals were won in 4Q (should go live by 2Q). Mode 2 business (digital, Promoters 60.0 0.0 0.0
cloud) continued to outgrow. We believe 1H could remain subdued whereas growth would DII 8.4 (0.2) 0.2
recover from 2H. We trim FY21E US$ revenues by 10% to factor in 1H weakness.
FII 27.7 (0.3) (0.6)
Margin profile improving: EBITM improved 64bps qoq/187bps yoy to 20.9% (88bps above Public 3.9 0.5 0.4
EE) led by forex gains (53bps qoq impact) and higher productivity in IT&BS segment (22bps)
partly offset by higher amortization from P&P (12bps). Margins for IT business services
expanded 124bps qoq and for ER&D/products declined 177bps/28bps qoq. Margins for
Mode 2 improved by 290bps (few one-offs aided) and for Mode 3 by 260bps, shoring up
margins. 1HFY21E margins may feel the impact of client discounts, volume-based billing
reduction and lower utilisation. We maintain FY21 margin assumptions at 19.6%. Relative price chart
HCLT IN Nifty Index
Operating metric analysis: Top 5/6-10/11-20 clients declined 0.7%/4.2%/4.7% qoq.
DSO were stable at 66 days. HCLT won 14 transformational deals in 4Q. Client mining 650

was strong with 2/4/6/79 clients added to the US$ 20mn+/10mn+5mn+/1mn+ buckets 575

qoq. OCF came in at US$ 521mn (FY20: US$ 1,743mn) while OCF/NI conversion for 500

LTM stood at 112%. FCF came in at US$ 1,480mn with FCF/NI at 63%. 425

350
View: Valuations are reasonable relative to strong growth in revenue and improving
Feb-20
May-19

Nov-19

May-20
Aug-19

margins. Levers to our thesis include a strong business portfolio, continued large deal wins,
a better portfolio mix, margin improvement and strong cash conversion. Source: Bloomberg

Financial Summary Analysts

EV/ Core EBITDA
YE Mar Recurring P/E P/B ROE
Sales EBITDA EPS (Rs) EBITDA ROIC Margin
Rs mn PAT (x) (x) (%)
(x) (%) (%)
FY20A 7,06,780 1,66,930 1,10,620 40.8 12.6 2.7 7.9 23.9 24.6 23.6
Rushabh Shah
FY21E 7,42,675 1,79,193 1,12,100 41.3 12.4 2.4 7.1 20.5 21.7 24.1 [email protected]
FY22E 8,22,906 2,01,975 1,31,075 48.3 10.6 2.2 6.0 21.4 24.8 24.5 +91-8141040900
FY23E 9,08,016 2,28,518 1,54,192 56.8 9.0 1.9 5.1 22.6 25.6 25.2
Source: Company, Equirus Securities

Refer to important disclosures at the end of this report May 07, 2020| 1
HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Exhibit 1: Quarterly performance

% Change
Particulars Q4FY20 Q4FY20E Q3FY20 Q4FY19 Comments
Q4FY20E Q3FY20 Q4FY19

Net Sales 1,85,900 1,84,342 1,81,350 1,59,900 0.8% 2.5% 16.3%

Net Sales ($ mn) 2,543.4 2,542.6 2,543.4 2,277.8 0.0% 0.0% 11.7% In line with EE
Cost of Revenues 1,14,790 1,17,610 1,15,100 1,04,210 -2.4% -0.3% 10.2%
SG&A 23,910 21,937 21,550 19,720 9.0% 11.0% 21.2%
Total Expenditures 138700 139547 136650 123930 -1% 2% 12%

EBITDA 47,200 44,795 44,700 35,970 5.4% 5.6% 31.2%

Depreciation 8,390 7,927 8,000 5,580 5.8% 4.9% 50.4%

Above EE led by lower cost of

EBIT 38,810 36,868 36,700 30,390 5.3% 5.7% 27.7%
revenue
Interest 0 0 0 0
Other Income -130 1,571 670 1,520 -108.3% -119.4% -108.6%

PBT 38,680 38,440 37,370 31,910 0.6% 3.5% 21.2%

Tax 7,070 8,457 6,910 6,150 -16.4% 2.3% 15.0%
Minority Interest 80 0 80 80
Recurring PAT 31,530 29,983 30,380 25,680 5.2% 3.8% 22.8%
Extraordinaries 0 0 0 0
Above EE led by lower tax cost,
Reported PAT 31,530 29,983 30,380 25,680 5.2% 3.8% 22.8%
partly offset by lower other income
EPS (Rs) 11.6 11.0 11.2 9.5 5.2% 3.8% 22.8%

EBITDA Margin 25.4% 24.3% 24.6% 22.5% 109 74 289

EBIT Margin 20.9% 20.0% 20.2% 19.0% 88 64 187
PBT Margin 20.8% 20.9% 20.6% 20.0% -5 20 85
PAT Margin 17.0% 16.3% 16.8% 16.1% 70 21 90
Tax Rate 18.3% 22.0% 18.5% 19.3% -372 -21 -99
Source: Company, Equirus Securities

May 07, 2020| 2

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Earnings call takeaways

Guidance
• No guidance for FY21E was provided in wake of Covid-19 uncertainty.

Financial updates
• Revenues were flat qoq, were up 11.7% yoy to US$ 2,543mn while growth in CC terms was
0.8%/13.5% qoq/yoy.

• End-period headcount stood at 150,423; net sequential addition was of 1,250.

• HCLT declared a final dividend of Rs 2/share.

• OCF/NI stood at 112% in FY20. FCF/NI was also strong at 63%.

Other updates
• 3 patents were filed during the quarter in next generation technologies and platforms while
10 patents were granted this quarter.

• Within Mode 1-2-3 strategy, Mode 1 consists of mature mid-life cycle aged projects with a
65.1% share in revenues. Mode 1 declined 0.4% qoq in CC with EBITm of 19.6%.

• Mode 2 consists of Cloud Native and Digital & Analytics (18.1% share) offerings with 7.1%
qoq-CC growth and 18.1% EBIT margins. Cloud native business is gaining good traction.

• Mode 3 consists of IP-related and telecom projects (15.7% share). It declined 1% qoq in CC
with 29.6% EBIT margins.

• Within verticals, management expects weakness across Mfg (Aerospace and Auto) and
Entertainment while FS, Telecom, LS&HC and Tech seems less impacted.

• HCLT won 14 transformational deals during the quarter.

• RoE at 23.6%.

• Gross cash stands at US$ 2,032mn while net cash stands at US$ 1,359mn.

• 96% of HCLT employees WFM while 2.5% working from HCL or client locations.

• New delivery center in Sri Lanka started.

• Cash EPS for FY20 at Rs 52.8/share.

May 07, 2020| 3

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Exhibit 2: Reported LTM attrition moderated

HCLT Dec’18 Mar’19 Jun’19 Sep’19 Dec’19 Mar’20
Attrition (gross additions - net additions) 8,738 8,612 10,937 10,207 9,452 9,028
Total Headcount 132328 137965 143900 147123 149173 150423
Computed Attrition (% Absolute)
27.6% 28.1% 28.7% 29.7% 29.2% 28.3%
Attrition LTM/Closing Headcount)
Reported Attrition (IT SvcsLTM) 17.8% 17.7% 17.3% 16.9% 16.8% 16.3%
Reported Attrition (BPO Quarterly) 8.3% 8.3% NA NA NA NA
Source: Company, Equirus Securities

Exhibit 3: Top customer growth metric

Revenue/ Client Matrix Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Top 5 Clients 76.6 77.4 78.5 77.6 77.3 76.8
qoq Growth 5.5% 1.1% 1.3% -1.2% -0.3% -0.7%
Top 10 Clients 54.6 54.9 56.5 57.4 57.0 56.0
qoq Growth 4.9% 0.5% 2.9% 1.6% -0.8% -1.8%
Top 20 Clients 37.5 38.0 40.4 41.9 42.0 40.8
qoq Growth 4.6% 1.3% 6.3% 3.6% 0.2% -2.7%
Source: Company, Equirus Securities

Exhibit 4: Client addition metric

USD 50 mn+ clients-YoY
Jun'18 Sep'18 Dec'18 Mar'19 Jun'19 Sep'19 Dec‘19 Mar‘20
Change
TCS 12 7 5 2 3 3 1 6
Infosys 0 3 3 3 3 3 0 1
HCLT 7 6 4 1 -3 -1 2 1
Wipro 4 0 0 2 1 2 0 -1
USD 100 mn+ clients-
Jun'18 Sep'18 Dec'18 Mar'19 Jun'19 Sep'19 Dec’19 Mar’20
YoY Change
TCS 4 7 8 6 4 3 0 5
Infosys 6 4 3 5 3 4 1 3
HCLT 1 0 1 2 3 4 2 -5
Wipro -1 0 1 2 5 4 1 5
Source: Company, Equirus Securities

Exhibit 5: Client addition metric

USD 1 mn+ clients (yoy change) Dec’18 Mar’19 Jun’19 Sep’19 Dec’19 Mar’20
TCS 55 45 36 43 57 64
Infosys 21 28 53 60 54 56
HCLT 45 62 62 92 115 168
Wipro -21 -24 -31 -15 -6 1
Source: Company, Equirus Securities

May 07, 2020| 4

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Exhibit 6: DSO’s flat sequentially

DSO
98
95 95 94
94 92 93
91
90
89 89 89
90 87 87 87 87 87 87 88 87 88
86 86
85 85 85 86
86
83
82
81
82

78

74

70

1Q15

4Q15

3Q16

3Q17
4Q13
1Q14
2Q14
3Q14
4Q14

2Q15
3Q15

1Q16
2Q16

1Q17
2Q17

4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
Source: Company, Equirus Securities

Exhibit 7: Key metrics

Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Net Sales ($ Mn) 1,988 2,038 2,055 2,099 2,202 2,278 2,364 2,486 2,543 2,543
Growth QoQ (%) 3.1% 2.5% 0.8% 2.1% 4.9% 3.5% 3.8% 5.2% 2.3% 0.0%
Net Sales (Rs. Mn) 128,080 131,790 138,780 1,48,610 1,56,990 1,59,900 1,64,270 1,75,280 1,81,350 1,85,900
Growth QoQ (%) 3.0% 2.9% 5.3% 7.1% 5.6% 1.9% 2.7% 6.7% 3.5% 2.5%
EBIT Margin 19.6% 19.6% 19.7% 20.0% 19.7% 19.0% 17.1% 20.0% 20.2% 20.9%
USD-INR realized rate 64.4 64.7 67.5 70.8 71.3 70.2 69.5 70.5 71.3 73.1

Revenue by Service Line (US$ Mn) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Engineering and R&D Services 57 10 12 32 26 -16

Custom Applications (Industry
10 5 -7 -6 10 39
Solutions)
Infrastructure services -13 31 -16 12 70 61
BPO services 4 6 27 6 -3 -7
IT Business Services 53 -5 11 10
Eng. and R&D Services 21 21 5 -10
Products and Platforms 11 106 42 0

Revenue by Vertical (US$ Mn) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Financial Services 7 21 -21 -6 -8 6 0 77 -7 -13

Manufacturing -287* -4 -15 2 11 9 72 21 39 -5
Technology& Services 332* 10 32 8 29 15 21 -64 1 28
Retail & CPG 11 4 -8 23 14 4 -3 24 13 -3
Media Publishing & Entertainment
-5 3 0 1 51 -6 -6 19 20 -18
(MPE) & Telecom
Healthcare 7 1 29 8 15 10 7 18 -10 8
Public Services (Energy-Utilities-
-2 13 0 9 -11 39 -4 25 4 5
Logistics-Govt.)
Revenue by Geography (US$ Mn) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

US 58 -6 70 58 37 14 168 0 -3 16
Europe 9 42 -34 -15 58 55 -64 88 42 -12
Rest of World -7 16 -19 1 8 7 -19 34 20 -4
Source: Company, Equirus Securities. Company was reporting IBM revenues under US geography and Technology vertical until last quarter which it is now reported
broadly across geos and verticals. So, data not comparable

May 07, 2020| 5

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Exhibit 8: Service line performance

Service line (%) Dec-17 Mar-18 Jun-18* Sep-18* Dec-18 Mar-19 Jun-19* Sep-19* Dec-19 Mar-20

Engineering and R&D Services 24.2% 24.1% 24.5% 25.5% 25.5% 23.9% - - - -

Industry Application Services 35.4% 34.7% 34.1% 33.1% 32.0% 32.6% - - - -

Infrastructure services 36.7% 37.3% 36.2% 36.0% 37.5% 38.9% - - - -

BPO services 3.7% 3.9% 5.2% 5.4% 5.0% 4.5% - - - -

IT Business Services 74.9% 75.8% 75.3% 71.4% 70.2% 70.6%

Eng. and R&D Services 17.3% 16.6% 16.9% 16.9% 16.7% 16.3%

Products and Platforms 7.8% 7.6% 7.8% 11.7% 13.1% 13.1%

Revenue by Service Line Dec-17 Mar-18 Jun-18* Sep-18* Dec-18 Mar-19 Jun-19* Sep-19* Dec-19 Mar-20

Engineering and R&D Services 481 491 503 535 561 545 - - - -
Custom Applications (Industry
703 707 701 695 704 743 - - - -
Solutions)
Infrastructure services 729 760 744 755 826 887 - - - -

BPO services 74 79 107 113 110 103 - - - -

IT Business Services 1539 1549 1727 1780 1775 1785 1796

Eng. and R&D Services 355 367 378 399 420 425 415

Products and Platforms 160 183 173 184 291 333 333

Service Line yoy growth (%) Dec-17 Mar-18 Jun-18* Sep-18* Dec-18 Mar-19 Jun-19* Sep-19* Dec-19 Mar-20

Engineering and R&D Services 47.8% 31.9% 24.3% 26.2% 16.7% 11.0% - - - -
Custom Applications (Industry
7.2% 5.8% 2.4% 0.4% 0.4% 5.1% - - - -
Solutions)
Infrastructure services 5.0% 7.8% 2.3% 1.8% 13.2% 16.6% - - - -

BPO services 5.3% 12.2% 57.5% 63.3% 49.7% 29.7% - - - -

IT Business Services 15.7% 14.6% 9.6% 4.0%

Eng. and R&D Services 12.4% 14.4% 12.8% 9.6%

Products and Platforms 15.0% 59.3% 70.1% 92.5%

Service line qoq growth (%) Dec-17 Mar-18 Jun-18* Sep-18* Dec-18 Mar-19 Jun-19* Sep-19* Dec-19 Mar-20

Engineering and R&D Services 13.4% 2.1% 2.5% 6.3% 4.9% -2.9% - - - -
Custom Applications (Industry
1.5% 0.8% -0.9% -0.8% 1.4% 5.5% - - - -
Solutions)
Infrastructure services 5.0% 4.2% -2.2% 1.6% 9.3% 7.4% - - - -

BPO services 5.9% 8.1% 34.4% 6.1% -2.9% -6.4% - - - -

IT Business Services 3.1% -0.3% 0.6% 0.6%

Eng. and R&D Services 5.6% 5.2% 1.1% -2.4%

Products and Platforms 6.5% 57.7% 14.6% 0.0%
Source: Company, Equirus Securities; *Service reporting has been changed from 1QFY20 and reported prior data has been provided for comparison. Company was
reporting IBM revenues under US geography and Technology vertical until last quarter which it is now reported broadly across geos and verticals. So, data not
comparable

May 07, 2020| 6

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Exhibit 9: Vertical performance

Vertical (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Financial Services 24.6% 25.0% 23.8% 23.0% 21.6% 21.1% 20.3% 22.4% 21.6% 21.1%

Manufacturing 19.9% 19.2% 18.3% 18.0% 17.7% 17.5% 19.9% 19.8% 20.9% 20.7%

Technology & Services 16.7% 16.8% 18.2% 18.2% 18.7% 18.7% 18.9% 15.4% 15.1% 16.2%

Telecom 7.4% 7.4% 7.3% 7.2% 9.2% 8.6% 8.0% 8.4% 9.0% 8.3%

Retail & CPG 9.6% 9.6% 9.1% 10.0% 10.2% 10.0% 9.5% 10.0% 10.3% 10.2%

Healthcare 11.7% 11.5% 12.8% 12.9% 13.0% 13.0% 12.8% 12.9% 12.2% 12.5%
Public Services (Energy-Utilities-
10.2% 10.6% 10.5% 10.7% 9.7% 11.1% 10.5% 11.0% 10.9% 11.1%
Logistics-Govt.)
Revenue by Vertical (US$ mn) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Financial Services 489 510 489 483 475 481 480 557 549 537

Manufacturing 396 391 376 378 389 399 471 492 532 526

Technology & Services 332 342 374 382 411 426 447 383 384 412

Telecom 147 150 150 151 202 196 189 209 229 211

Retail & CPG 191 195 187 210 224 228 225 249 262 259

Healthcare 233 234 263 271 286 296 303 321 310 318
Public Services (Energy-Utilities-
203 216 216 225 214 253 249 273 277 282
Logistics-Govt.)
Vertical yoy growth (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Financial Services 15.3% 15.9% 4.2% 0.1% -2.8% -5.7% -1.8% 15.4% 15.6% 11.7%

Manufacturing -33.1% -37.8% -42.8% -44.7% -1.6% 1.9% 25.2% 30.3% 36.6% 32.1%

Technology & Services - - -* - 23.9% 24.6% 19.6% 0.2% -6.6% -3.3%

Telecom -4.9% -1.5% 0.8% -0.8% 37.4% 30.2% 26.3% 38.2% 13.3% 7.8%

Retail & CPG 16.3% 16.8% 4.4% 17.0% 17.5% 16.7% 20.3% 18.4% 16.9% 13.9%

Healthcare 11.0% 12.0% 18.3% 20.0% 23.1% 26.6% 15.2% 18.4% 8.4% 7.4%
Public Services (Energy-Utilities-
3.9% 1.4% 3.1% 9.9% 5.3% 17.3% 15.2% 21.8% 29.8% 11.7%
Logistics-Govt.)
Vertical qoq growth (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Financial Services 1.4% 4.2% -4.0% -1.3% -1.6% 1.2% -0.1% 16.0% -1.3% -2.3%

Hi-Tech Manufacturing -42.1% -1.1% -3.9% 0.5% 3.0% 2.4% 18.1% 4.6% 8.0% -1.0%

Technology & Services - 3.0% 9.3% 2.1% 7.7% 3.6% 5.0% -14.4% 0.3% 7.3%

Telecom -3.4% 2.3% -0.3% 0.7% 33.8% -3.1% -3.3% 10.2% 9.6% -7.8%

Retail & CPG 6.4% 2.3% -4.2% 12.2% 6.8% 1.6% -1.3% 10.5% 5.4% -1.0%

Healthcare/Life Sciences 3.1% 0.6% 12.4% 2.9% 5.7% 3.5% 2.3% 5.9% -3.2% 2.5%

Energy-Utilities-Public Sector -0.8% 6.4% 0.0% 4.1% -4.9% 18.4% -1.7% 10.0% 1.4% 1.8%
Source: Company, Equirus Securities*Manufacturing has been segregated as Manufacturing and Technology and Services from Q1FY19. Company was reporting
IBM revenues under US geography and Technology vertical until last quarter which it is now reported broadly across geos and verticals. So, data not comparable

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HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Exhibit 10: Geographical performance

Geography (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

US 63.5% 61.6% 64.4% 65.8% 64.4% 62.9% 67.7% 64.4% 62.8% 63.4%
Europe 28.7% 30.0% 28.1% 26.8% 28.2% 29.7% 25.9% 28.2% 29.2% 28.7%
Rest of World 7.9% 8.5% 7.5% 7.4% 7.3% 7.4% 6.3% 7.4% 8.0% 7.8%

Revenue by Geography (US$ mn) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

US 1,261 1255 1323 1381 1418 1433 1601 1601 1597 1613
Europe 570 611 577 562 622 677 613 701 743 731
Rest of World 157 172 154 155 161 169 150 184 203 199

Geography yoy growth (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

US 16.8% 10.3% 11.8% 14.8% 12.4% 14.2% 21.0% 15.9% 12.6% 12.6%
Europe 10.3% 21.4% 11.8% 0.2% 9.1% 10.8% 6.2% 24.6% 19.5% 8.0%
Rest of World 5.8% -2.2% -16.6% -5.2% 2.8% -2.2% -2.9% 18.4% 26.0% 18.2%

Geography qoq growth (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

US 4.9% -0.5% 5.4% 4.4% 2.7% 1.0% 11.7% 0.0% -0.2% 1.0%
Europe 1.6% 7.2% -5.5% -2.6% 10.5% 8.8% -9.4% 14.4% 6.0% -1.6%
Rest of World -4.2% 9.8% -10.6% 0.8% 4.0% 4.4% -11.2% 22.9% 10.6% -2.1%
Source: Company, Equirus Securities;

Exhibit 11: Top client performance

Top Clients (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Top 5 Clients 15.8% 16.3% 17.0% 17.3% 17.4% 17.0% 16.6% 15.6% 15.2% 15.1%
Top 10 Clients 23.5% 23.8% 24.6% 24.8% 24.8% 24.1% 23.9% 23.1% 22.4% 22.0%
Top 20 Clients 33.5% 33.7% 34.2% 34.2% 34.1% 33.4% 34.2% 33.7% 33.0% 32.1%
Top 6-10 Clients 7.7% 7.5% 7.6% 7.5% 7.4% 7.1% 7.3% 7.5% 7.2% 6.9%
Top 11-20 Clients 10.0% 9.9% 9.6% 9.4% 9.3% 9.3% 10.3% 10.6% 10.6% 10.1%

Revenue by Top Clients (US$ mn) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Top 5 Clients 314 332 349 363 383 387 392 388 387 384
Top 10 Clients 467 485 505 520 546 549 565 574 570 560
Top 20 Clients 666 687 703 718 751 761 808 838 839 816
Top 6-10 Clients 153 153 156 157 163 162 173 186 183 175
Top 11-20 Clients 199 202 197 197 205 212 243 263 270 257

Geography yoy growth (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Top 5 Clients 26.7% 24.4% 28.7% 24.7% 22.0% 16.6% 12.3% 6.8% 0.9% -0.8%
Top 10 Clients 23.3% 20.8% 19.7% 17.9% 16.9% 13.2% 11.8% 10.3% 4.3% 1.9%
Top 20 Clients 19.6% 14.9% 13.0% 12.1% 12.8% 10.8% 15.0% 16.7% 11.8% 7.3%
Top 6-10 Clients 16.9% 13.7% 3.6% 4.7% 6.5% 5.8% 10.5% 18.4% 12.4% 8.5%
Top 11-20 Clients 11.6% 2.8% -1.2% -0.7% 3.0% 5.0% 23.4% 33.6% 31.7% 21.3%

Geography qoq growth (%) Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Top 5 Clients 7.9% 5.8% 5.1% 3.9% 5.5% 1.1% 1.3% -1.2% -0.3% -0.7%
Top 10 Clients 5.8% 3.8% 4.2% 3.0% 4.9% 0.5% 2.9% 1.6% -0.8% -1.8%
Top 20 Clients 4.0% 3.2% 2.3% 2.1% 4.6% 1.3% 6.3% 3.6% 0.2% -2.7%
Top 6-10 Clients 1.8% -0.1% 2.2% 0.8% 3.5% -0.7% 6.7% 8.0% -1.8% -4.2%
Top 11-20 Clients 0.1% 1.5% -2.2% 0.0% 3.8% 3.5% 14.9% 8.2% 2.3% -4.7%
Source: Company, Equirus Securities; Company was reporting IBM revenues under US geography and Technology vertical until last quarter which it is now reported
broadly across geos and verticals. So, data not comparable

May 07, 2020| 8

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Company Snapshot
How we differ from consensus
Particular (Rs Mn) Equirus Consensus % Diff Comment
FY21E 41.3 41.7 -1%
EPS
FY22E 48.3 46.3 4%
FY21E 7,42,675 7,58,348 -2% Strong margin profile in 4Q
Sales
FY22E 8,22,906 8,22,317 0% not baked in consensus

FY21E 1,12,100 1,12,002 0%

PAT
FY22E 1,31,075 1,24,195 6%

Key Estimates
Key Assumptions FY20 FY21E FY22E FY23E
Overall Revenue (US$ mn) 9,936 9,902 10,972 12,107
Yoy growth (%) 15.1% -0.3% 10.8% 10.3%
Overall Revenue (Rs Mn) 7,06,780 7,42,675 8,22,906 8,44,219
EBIT Margin (%) 19.6% 19.6% 20.4% 21.4%
PBT Margin (%) 19.9% 19.6% 20.4% 21.8%
PAT Margin (%) 15.7% 15.1% 15.9% 17.0%
USD-INR rate 71.1 75.0 75.0 75.0

Our Key Investment arguments:

• Valuations continue to be reasonable.

• Double-digit growth guidance, albeit with acquisition contribution

• Sustaining current margin profile

Risk to Our View:

Growth deceleration led by organic, IMS business, and decision-making delays in the US, and margins
pressure are key risks to our thesis.

May 07, 2020| 9

 HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Comparable valuation
Div Yield
Mkt EPS (Rs) P/E (x) P/B (x) RoE (%)
Price Target
Company Reco. CMP Cap Rs.
Target Date
bn. FY19A FY20A/E FY21A/E FY19A FY20A/E FY21E FY19A FY20A/E FY21E FY19A FY20E FY21E FY20A/E

TCS ADD 1,891 7,097 1,780 Jun '21 36% 37% 38% 3.9%
83.0 86.2 88.6 22.8 21.9 21.3 8.1 8.6 7.8
Infosys LONG 666 2,836 800 Jun '21 25% 26% 25% 2.6%
35.4 38.9 40.3 18.8 17.1 16.5 4.5 4.4 4.2
HCL Tech LONG 512 1,389 642 Jun '21 26% 24% 21% 1.2%
37.3 40.8 41.3 13.7 12.6 12.4 3.4 2.7 2.4
Wipro LONG 184 1,053 236 Jun '21 16% 17% 16% 0.5%
14.3 16.4 15.8 12.9 11.3 11.6 2.0 2.0 1.8
Tech
LONG 516 498 640 Jun '21 21% 18% 16% 2.4%
Mahindra 48.0 48.3 44.3 10.7 10.7 11.6 2.1 2.0 1.8
Cyient REDUCE 233 26 248 Jun '21 20% 15% 11% 5.9%
42.3 34.9 26.3 5.5 6.7 8.9 1.0 1.0 1.0
eClerx REDUCE 467 17 431 Sep '20 19% 14% 14% 0.2%
60.0 49.5 53.5 7.8 9.4 8.7 1.3 1.3 1.1
Hexaware REDUCE 245 73 340 Mar '21 27% 25% 21% 3.4%
19.3 21.2 20.1 12.7 11.5 12.2 3.1 2.7 2.4
LTTS REDUCE 1,188 124 1,426 Mar '21 35% 30% 28% 1.8%
72.5 76.3 83.9 16.4 15.6 14.2 5.1 4.4 3.7
Mphasis LONG 752 140 940 Mar '21 20% 21% 22% 3.3%
55.9 59.5 65.1 13.5 12.6 11.6 2.8 2.7 2.4
MSTC LONG 90 6 189 Sep '20 NA -81% 30% 28% 0.0%
(43.6) 18.1 21.2 5.0 4.2 1.6 1.3 1.1
NIIT Tech ADD 1,367 85 1290 Jun'21 22% 21% 19% 1.9%
65.0 71.0 73.3 21.0 19.2 18.6 4.1 3.5 3.2
Persistent ADD 532 41 619 Sep '20 16% 14% 14% 2.2%
44.0 44.4 45.1 12.1 12.0 11.8 1.8 1.7 1.6
Zensar LONG 84 19 248 Sept'20 18% 17% 18% 2.4%
14.2 15.2 18.7 5.9 5.5 4.5 1.0 0.9 0.8

Price to earning chart Price to book chart

25 7.0

6.0
20
+1δ 5.0
15 Avg +1δ
4.0
-1δ Avg
10 3.0 -1δ

2.0
5
1.0

0 0.0
May-10 May-12 May-14 May-16 May-18 May-20 May-10 May-12 May-14 May-16 May-18 May-20

Source: Company, Equirus Research Source: Company, Equirus Research

May 07, 2020| 10

 HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Quarterly performance
Y/E Mar (Rs mn) 1QFY20A 2QFY20A 3QFY20A 4QFY20A 1QFY21E 2QFY21E 3QFY21E 4QFY21E
Revenue 1,64,250 1,75,280 1,81,350 1,85,900 1,80,242 1,80,516 1,87,130 1,94,787
Cost of revenue 1,09,200 1,13,860 1,15,100 1,14,790 1,13,913 1,13,906 1,17,892 1,22,911
SG&A 21,050 20,390 21,550 23,910 23,251 23,106 23,766 24,738
Other Expenses 0 0 0 0 0 0 0 0

EBITDA 34,000 41,030 44,700 47,200 43,078 43,504 45,473 47,138

Depreciation 5,950 6,060 8,000 8,390 8,381 8,304 8,421 8,473
EBIT 28,050 34,970 36,700 38,810 34,697 35,201 37,052 38,665
Interest Exp. 0 0 0 0 0 0 0 0
Other Income 190 (100) 130 (360) (360) (361) (374) (390)
Profit before Tax 29,330 34,940 37,370 38,680 34,632 35,182 37,064 38,705
Tax Expenses 7,050 8,350 6,910 7,070 7,965 8,092 8,525 8,902
Profit After Tax 22,280 26,590 30,460 31,610 26,667 27,090 28,539 29,803
Minority Interest (80) (80) (80) (80) 0 0 0 0
Profit/(Loss) from Associates 0 0 0 0 0 0 0 0
Recurring PAT 22,200 26,510 30,380 31,530 26,667 27,090 28,539 29,803
Exceptional Items 0 0 0 0 0 0 0 0
Reported PAT 22,200 26,510 30,380 31,530 26,667 27,090 28,539 29,803
Other comprehensive income. 0 0 0 0 0 0 0 0
PAT after comp. income. 22,200 26,510 30,380 31,530 26,667 27,090 28,539 29,803
FDEPS 8.2 9.8 11.2 11.6 9.8 10.0 10.5 11.0
Cost items as % of sales
RM expenses 66.5 65.0 63.5 61.7 63.2 63.1 63.0 63.1
Employee expenses 12.8 11.6 11.9 12.9 12.9 12.8 12.7 12.7
Other expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Margin (%)
Gross Margin 33.5 35.0 36.5 38.3 36.8 36.9 37.0 36.9
EBITDA Margin 20.7 23.4 24.6 25.4 23.9 24.1 24.3 24.2
PAT Margin 13.5 15.1 16.8 17.0 14.8 15.0 15.3 15.3
YoY Growth (%)
Sales 18.4 17.9 15.5 16.3 9.7 3.0 3.2 4.8
EBITDA 5.4 17.3 22.6 31.2 26.7 6.0 1.7 (0.1)
EBIT 2.8 17.9 18.9 27.7 23.7 0.7 1.0 (0.4)
PAT (7.6) 4.4 16.4 22.8 20.1 2.2 (6.1) (5.5)

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HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Key Financials (Consolidated)

Income Statement
Y/E Mar (Rs mn) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Revenue 4,67,225 5,05,700 6,04,280 7,06,780 7,42,675 8,22,906 9,08,016
Cost of revenue 3,08,890 3,32,370 3,92,680 4,52,950 4,68,621 5,17,371 5,67,713
SG&A 55,240 58,930 71,920 86,900 94,861 1,03,560 1,11,785
Other Expenses 0 0 0 0 0 0 0

EBITDA 1,03,095 1,14,400 1,39,680 1,66,930 1,79,193 2,01,975 2,28,518

Depreciation 8,340 14,520 21,480 28,400 33,579 34,208 34,132
EBIT 94,755 99,880 1,18,200 1,38,530 1,45,614 1,67,766 1,94,385
Interest Exp. 0 0 0 0 0 0 0
Other Income 1,870 5,413 1,810 (140) (1,485) (1,646) 908
Profit before Tax 1,04,085 1,10,993 1,26,250 1,40,320 1,45,584 1,68,045 1,97,682
Tax Expenses 19,532 23,167 24,810 29,380 33,484 36,970 43,490
Profit After Tax 84,553 87,826 1,01,440 1,10,940 1,12,100 1,31,075 1,54,192
Minority Interest 0 0 (220) (320) 0 0 0
Profit/(Loss) from Associates 0 0 0 0 0 0 0
Recurring PAT 84,553 87,826 1,01,220 1,10,620 1,12,100 1,31,075 1,54,192
Exceptional Items 0 0 0 0 0 0 0
Reported PAT 84,553 87,826 1,01,220 1,10,620 1,12,100 1,31,075 1,54,192
Other comprehensive income. 0 0 0 0 0 0 0
PAT after comp. income. 84,553 87,826 1,01,220 1,10,620 1,12,100 1,31,075 1,54,192
FDEPS 31.2 32.4 37.3 40.8 41.3 48.3 56.8
DPS 13 4 4 6 20 24 29
BVPS 121 134 152 189 213 237 265

YoY Growth (%) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Sales 50.1 8.2 19.5 17.0 5.1 10.8 10.3
EBITDA 54.0 11.0 22.1 19.5 7.3 12.7 13.1
EBIT 51.6 5.4 18.3 17.2 5.1 15.2 15.9
PAT 419.4 189.5 15.5 9.4 1.0 16.9 0.0

Key Ratios
Profitability (%) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Gross Margin 33.9 34.3 35.0 35.9 36.9 37.1 37.5
EBITDA Margin 22.1 22.6 23.1 23.6 24.1 24.5 25.2
PAT Margin 18.1 17.4 16.8 15.7 15.1 15.9 17.0
ROE 27.9 25.3 26.0 23.9 20.5 21.4 22.6
ROIC 26.4 24.2 23.9 20.5 17.5 18.8 20.4
Core ROIC 33.9 26.8 26.8 24.6 21.7 24.8 25.6
Dividend Payout 48.7 15.4 13.1 13.8 48.4 49.7 50.7

CAGR (%) 1 year 2 years 3 years 5 years 7 years 10 years

Revenue 19.5 13.7 24.7 12.9 16.3 19.0
EBITDA 22.1 16.4 27.8 10.0 19.5 19.7
PAT 15.3 9.4 22.0 9.7 21.9 23.0

Valuation (x) FY17A FY18A FY19A FY20A FY21E FY22E FY23E

P/E 16.4 15.8 13.7 12.6 12.4 10.6 9.0
P/B 4.2 3.8 3.4 2.7 2.4 2.2 1.9
P/FCFF 18.0 46.2 25.1 12.0 14.0 11.0 10.2
EV/EBITDA 11.2 11.3 10.1 7.9 7.1 6.0 5.1
EV/Sales 2.5 2.5 2.3 1.9 1.7 1.5 1.3
Dividend Yield (%) 2.5 0.8 0.8 1.2 3.9 4.7 5.6

May 07, 2020| 12

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Balance Sheet
Y/E Mar (Rs mn) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Equity Capital 2,850 2,780 2,710 5,430 5,280 5,280 5,280
Reserves 3,26,640 3,61,080 4,10,950 5,07,240 5,73,146 6,39,094 7,15,132
Net Worth 3,29,490 3,63,860 4,13,660 5,12,670 5,78,426 6,44,374 7,20,412
Total Debt 4,380 3,800 37,010 46,930 43,567 37,700 31,834
Other long term liabilities 9,220 11,920 18,300 49,070 45,553 39,420 33,286
Minority Interest 1,730 0 1,030 1,540 1,540 1,540 1,540
Account Payables 8,010 9,180 13,050 11,660 12,063 13,318 14,614
Other Current Liabilities 1,04,790 91,470 1,02,700 2,07,190 2,17,713 2,41,232 2,66,182
Total Liabilities 4,57,620 4,80,230 5,85,750 8,29,060 8,98,862 9,77,584 10,67,868
Gross Fixed Assets 2,01,381 2,51,071 3,13,901 4,88,321 5,20,321 5,52,321 5,84,321
Acc. Depreciation (49,031) (63,541) (85,021) (1,13,421) (1,47,000) (1,81,208) (2,15,341)
Net Fixed Assets 1,52,350 1,87,530 2,28,880 3,74,900 3,73,321 3,71,113 3,68,980
Capital WIP 4,480 3,200 2,350 4,000 0 0 0
long term investments 1,600 3,030 850 770 770 770 770
Others 34,560 40,890 56,450 65,190 72,240 72,240 72,240
Inventory 2,760 1,720 910 910 956 1,060 1,169
Receivables 83,010 96,390 1,17,060 1,41,310 1,44,417 1,55,509 1,66,618
Loans and advances 25,210 34,100 13,120 34,220 35,958 39,842 43,963
Other current assets 63,210 49,620 65,210 88,110 1,08,379 1,24,834 1,55,524
Cash & Cash Equivalents. 90,440 63,750 1,00,920 1,19,650 1,62,821 2,12,216 2,58,603
Total Assets 4,57,620 4,80,230 5,85,750 8,29,060 8,98,862 9,77,584 10,67,868
Non-Cash WC 61,390 81,180 80,550 45,700 59,934 66,695 86,478
Cash Conv. Cycle 57.0 62.0 59.8 64.3 62.3 60.3 58.3
WC Turnover 7.6 6.2 7.5 15.5 12.4 12.3 10.5
Gross Asset Turnover 232.0 201.4 192.5 144.7 142.7 149.0 155.4
Net Asset Turnover 3.0 2.7 2.6 1.9 2.0 2.2 2.5
Net D/E (26.0) (16.5) (15.4) (14.1) (20.6) (27.0) (31.4)

Days (x) FY17A FY18A FY19A FY20A FY21E FY22E FY23E

Receivable Days 65 70 71 73 71 69 67
Inventory Days 2 2 1 1 1 1 1
Payable Days 9 10 12 9 9 9 9
Non-cash WC days 48 59 49 24 29 30 35
Cash Flow
Y/E Mar (Rs mn) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Profit Before Tax 1,04,085 1,10,240 1,26,220 1,39,800 1,45,584 1,68,045 1,97,682
Depreciation 8,340 13,830 20,730 34,200 33,579 34,208 34,132
Others 11,343 (4,890) (6,370) 770 0 0 0
Tax paid (20,070) (23,560) (26,210) (25,580) (33,484) (36,970) (43,490)
Change in WC (15,031) (12,340) (24,660) (15,600) (14,234) (6,760) (19,784)
Operating Cashflow 88,668 83,280 89,710 1,33,590 1,31,444 1,58,523 1,68,541
Capex (11,682) (53,210) (34,340) (18,290) (32,000) (32,000) (32,000)
Change in Invest. (36,209) 28,350 500 (1,06,880) 0 0 0
Others 9,725 2,030 3,110 1,430 (3,050) 0 0
Investing Cashflow (38,166) (22,830) (30,730) (1,23,740) (35,050) (32,000) (32,000)
Change in Debt (4,133) (1,390) 36,500 (14,070) (3,363) (5,866) (5,866)
Change in Equity 2 (35,140) (40,120) 0 7,930 0 0
Others (41,200) (20,610) (11,000) (17,610) (57,790) (71,262) (84,287)
Financing Cashflow (45,331) (57,140) (14,620) (31,680) (53,223) (77,128) (90,154)
Net Change in Cash 5,171 3,310 44,360 (21,830) 43,171 49,395 46,387
Source: Company, Equirus Research

May 07, 2020| 13

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

Equirus Securities
Satish Kumar Head of Equities [email protected] 91-22-43320616
Research Analysts Sector/Industry Email
Ashutosh Tiwari Auto [email protected] 91-79-61909517
Bharat Celly Healthcare [email protected] 91-79-61909524
Depesh Kashyap Mid-Caps [email protected] 91-22-43320671
Dhaval Dama FMCG, Mid-Caps [email protected] 91-79-61909518
Harshit Patel Capital Goods [email protected] 91-79-61909522
Manoj Gori Consumer Durables [email protected] 91-79-61909523
Maulik Patel Oil and Gas [email protected] 91-79-61909519
Pranav Mehta Building Materials, Cement [email protected] 91-79-61909514
Rohan Mandora Banking & Financial Services [email protected] 91-79-61909529
Ronak Soni FMCG [email protected] 91-79-61909525
Shreyans Mehta Infrastructure [email protected] 91-22-43320611
Siddharth Gadekar Metals, Chemicals [email protected] 91-22-43320670
Varun Baxi Auto Ancillary [email protected] 91-22-43320643
Vikas Jain Textiles [email protected] 91-79-61909531
Associates E-mail
Akshay Falgunia [email protected] 91-79-61909516
Lalit Deo [email protected] 91-79-61909533
Mayank Chaturvedi [email protected] 91-79-61909586
Narendra Mhalsekar [email protected] 91-79-61909513
Nishant Bagrecha [email protected] 91-79-61909526
Parth Kamdar [email protected] 91-79-61909528
Rushabh Shah [email protected] 91-79-61909520
Shreepal Doshi [email protected] 91-79-61909541
Equity Sales E-mail
Girish Solanki [email protected] 91-22-43320634
Ruchi Bhadra [email protected] 91-22-43320601
Subham Sinha [email protected] 91-22-43320631
Pooja Mehta [email protected] 91-22-43320636
Viral Desai [email protected] 91-22-43320635
Vishad Turakhia [email protected] 91-22-43320633
Cash Dealing Room
Bhavik Shah [email protected] 91-22-43320669
Dharmesh Mehta [email protected] 91-22-43320661
Gaurav Mehta [email protected] 91-22-43320680
Manoj Kejriwal [email protected] 91-22-43320663
Vikram Patil [email protected] 91-22-43320677
Compliance Officer
Jay Soni [email protected] 91-79-61909561
Corporate Communications
Mahdokht Bharda [email protected] 91-22-43320647
Quant Analyst
Kruti Shah [email protected] 91-22-43320632
F&O Dealing Room
Kunal Dand [email protected] 91-22-43320678
Mukesh Jain [email protected] 91-22-43320667
Shrikant Pandya [email protected] 91-22-43320660

Rating & Coverage Definitions: Registered Office:

Absolute Rating Equirus Securities Private Limited
• LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion Unit No. 1201, 12th Floor, C Wing, Marathon Futurex,
and ATR >= 20% for rest of the companies N M Joshi Marg, Lower Parel,
• ADD: ATR >= 5% but less than Ke over investment horizon Mumbai-400013.
• REDUCE: ATR >= negative 10% but <5% over investment horizon Tel. No: +91 – (0)22 – 4332 0600
• SHORT: ATR < negative 10% over investment horizon Fax No: +91- (0)22 – 4332 0601
Relative Rating
• OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon Corporate Office:
• BENCHMARK: likely to perform in line with the benchmark 3rd floor, House No. 9,
• UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge,
Investment Horizon S.G. Highway Ahmedabad-380054
Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of Gujarat
a calendar quarter. Tel. No: +91 (0)79 - 6190 9550
Fax No: +91 (0)79 – 6190 9560

May 07, 2020| 14

HCL Technologies Ltd (HCLT IN ) India Equity Research | Result Review

© 2020 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Equirus Securities
Private Limited
Analyst Certification
I, Rushabh Shah, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that
no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures
Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC176044 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the Capital
Market (Reg. No. INB231301731), Futures & Options Segment (Reg. No.INF231301731) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB011301737) of Bombay Stock Exchange
Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 2014 (Reg. No. INH000001154), as a Portfolio Manager under SEBI (Portfolio Managers Regulations, 1993
(Reg. No.INP000005216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP-324-2017). There are no disciplinary actions taken by any regulatory authority against ESPL.
ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to merchant banking services, private
equity, mergers & acquisitions and structured finance.
As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for investment
banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have received a mandate
from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may
from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in their proprietary position) 1% or more of
the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or Associates did not receive any compensation or
other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor Research Analysts have any material conflict of interest at the
time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ESPL has not been engaged in market
making activity for the subject company.
The Research Analyst engaged in preparation of this Report:-
(a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months; (c) has
not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or services
other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third
party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company.
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