Buy this large-cap share of India’s 4th-largest IT company and gain 21% on your investment in FY19

By: | Published: March 26, 2018 11:28 AM

Amid the rout in the Indian equities following a downturn in the Asian peers led by sharp declines in the US stock markets from Thursday last week, we bring to you the stock of India's fourth-largest company to buy and gain 21%.

Photo for representational purposes only. (Image: Wikimedia Commons)

Indian stock markets have been undergoing massive declines since Thursday last week on the escalated uncertainties over the trade war between the United States and China. Amid the rout in the Indian equities following a downturn in the Asian peers led by sharp declines in the US stock markets from Thursday, we bring to you the stock of India’s fourth-largest company to buy and gain 21%. Shares of country’s fourth-largest IT service provider HCL Technologies have been recommended as a ‘buy’ from the research and brokerage firm HDFC Securities.

Shares of the Noida-headquartered IT company HCL Technologies have risen about 13% in the last one year registering an underperformance as compared to the IT sector benchmark Nifty IT index which has advanced nearly 15% in the same period under review. In a research report, HDFC Securities has mentioned that going forward a healthy order pipeline will ensure better revenue visibility in the fastest-growing large IT company with industry-beating productivity metrics.

Better margins are also expected as growth engine has gradually being shifted from IMS to ER&D with continued investment in internal IP creation, as well as innovative IP-based partnerships which are likely to improve revenue visibility, HDFC Securities added.

HDFC Securities has given a one-year target price of Rs 1,156 which implies an upside of 20.79% from the current market price of Rs 957.4. “We feel investors could buy the stock at the CMP (current market price) and add on dips to Rs 872-880 band (~ 11.75x FY20E EPS) for sequential targets of Rs 1,062 (14.25x FY20E EPS) and Rs 1,156 (15.5x FY20E EPS). At the CMP of Rs 957.4, the stock trades at 12.8x FY20E EPS, HDFC Securities said in a research report.

Shares of HCL Technologies hit a 52-high price of Rs 1,040.7 on 24 January 2018 and a 52-week low of Rs 796.2 on 27 April 2017. The stock of HCL Technologies had surged about 1.9% in the month of March so far.

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