FUNDAMENTAL

ANALYSIS

HCL TECHNOLOGIES

Team Excelsior
Prepared by:
Abheya Arora
Devansh Jajoria
 FUNDAMENTAL ANALYSIS CURRENT STATUS
●HCL became the 4th IT company
Areas Covered to hit the Rs. 3 Trillion market
Capitalization.
Financial Analysis & DCF Valuation
●5th strongest Global IT services
●
50+ Business Segments and Clients
asdasd
●
Countries ● Industry/Policy Overview brand
● Competitors analysis (on the basis of KPIs) ●Industry-leading corporate
● Share Price and holding analysis governance quality score

FINANCIAL ANALYSIS FY 2021 Results: Revenue- 76,306(7% Growth), Profit-11,927

(3.38% Growth)

BUSINESS SEGMENTS & CLIENTS

The revenue contribution: the top 5 clients contribute IT&

Business
15.1% of the revenue and top 20 contribute 32% of Services
the revenue.

BUSINESS SEGMENTS
This results in a lot of revenue stability being focussed
Terminal Value in few hands and can lead to adverse effects in case of Engg. &

OUR ANALYSIS ₹1,93,400.56 Crores

(Average of Exit multiple & Perpetual Growth method)
client related problems with any among the top clients. R&D
Services

● Derives that HCL Technologies currently trades at a premium 81% and the Intrinsic Value of the share would be ₹712.69.
Product
● For developing this forecast, we assumed that the company’s revenues would grow in a regressive manner coming in terms &
with the projected growth of the whole sector. Platform
● Costs are assumed to increase but the rise would not be proportionate to the revenue growth indicating that the company
would continue to increase its efficiency
● The Tax rate has been currently lowered due to the pandemic, but they are anticipated to rise in the future. To view the complete excel Sheet Finvent- Excel sheet
 INDUSTRY AND GOVERNMENT POLICY PROMOTERS HOLDING
Market Size
➔ Make in India
➔ Phased Manufacturing Programme
➔ Simplified Other Service Provider
Guidelines High promoters holding showcase the
confidence and trust in the management
and workings of the company.
In Budget 2021, the government has
allocated Rs. 53,108 crore (US$ 7.31 It is a low debt company with zero
billion) to the IT and telecom sector. Promoters pledge by the company

● India’s IT market is projected to reach USD 19.93 billion by 2025.

● IT spending in India is estimated to reach US$ 93 billion in 2021 and US$ 98.5 billion in 2022
● Global investments estimated to exceed ~US$ 200 billion annually by 2025.
● In 2020, IT & BPM led the venture capital (VC) investment contributed 71% of the total deal SHARE PRICE ANALYSIS
count. The pandemic has accelerated the demand for third-party data centre services in India.
● The Government of India has extended tax holidays to the IT sector for Software Technology
Parks of India (STPI) and Special Economic Zones (SEZs). We note that in the past 5 years,
HCLTECH has had a ~25% CAGR
COMPETITOR’S ANALYSIS Even recently, HCLTECH has returned
over 31% in 6 months beating
most of its competitors as well. The
Q2 results were promising and
showed a profit of over 6,748 Crore
Rupees.
● An analysis of the Key ratios of the IT sector, HCL Technologies and its competitors shows that HCL is The P/E Ratio is well below the industry average of 29.7x indicating
thoroughly liquid, it has a low Price to Book ratio indicating that the share not as overvalued as its P/E Ratio = 24.7x | EPS = 32.2 that HCLTECH is a good buy even at current prices due to the ongoing
competitors & the highest net profit margin among its competitors. demand of IT services and the accommodative stance of the government