1. Executive Summary
- Market Capitalisation: ₹4,33,060 Cr
- Current Price: ₹1,596
- High / Low (52-week): ₹2,012 / ₹1,235
- Stock P/E (TTM): 24.9×
- Book Value: ₹257
- Dividend Yield: 3.43%
- ROCE / ROE: 31.9% / 25.2%
- Debt / Reserves: ₹6,276 Cr / ₹69,112 Cr
- Promoter Holding: 60.8%
- Share Count: 271 Crore
HCLTech delivered a solid Latest Q4 FY2025 Results, with revenue of ₹30,246 Crore (+1.2% QoQ, +6.2% YoY) and profit after tax of ₹4,309 Crore . Operating margins held firm at ~21.8% (vs. 21.5% in Q3), underpinned by robust services growth and cost discipline. The Board declared an interim dividend of ₹18 per share (incl. special payout) .
2. Latest Q4 FY25 Highlights
- Revenue: ₹30,246 Cr, +1.2% QoQ, +6.2% YoY
- EBIT: ₹5,735 Cr (EBIT margin ~19.0%)
- Profit after tax: ₹4,309 Cr, −6.2% QoQ (due to tax base), +7.9% YoY
- Other Income: ₹449 Cr, stable QoQ
- Cash Flow: Operating cash flow of ₹22,261 Cr; free cash flow of ₹20,?00 Cr for FY25
- CAPEX: ₹1,108 Cr invested in digital, AI labs and campus expansions
- Headcount: 223,000+, net addition of 2,200 employees; LTM attrition at ~12.8%
3. Key Metrics & Financial Ratios
| Metric | Value |
|---|---|
| Price/Earnings (P/E) | 24.9× |
| Price/Book (P/B) | 6.2× |
| Dividend Yield | 3.43% |
| ROCE | 31.9% |
| ROE | 25.2% |
| Net Debt / Equity | 0.09× |
| Sales Growth (3-yr CAGR) | 11.0% |
| Profit Growth (3-yr CAGR) | 9.08% |
| OPM | 21.8% |
| Debt / EBITDA | ~0.3× |
4. Management Updates & Growth Strategy
- AI & Digital Leadership: Continued investment in “AI Force” platform, Gen AI labs with partners (SAP, ServiceNow), and integration of GitHub Copilot to accelerate internal and client-facing digitalization.
- Strategic Acquisitions: Completion of HPE CTG asset acquisition bolsters edge-to-cloud engineering capabilities, particularly in Telecom and Media.
- Hyperscaler Partnerships: Deepening alliances with AWS, Microsoft Azure, Google Cloud to drive cloud migrations, data analytics, FinOps and AI use cases.
- Sector Focus: Strong deal momentum in Financial Services (hybrid-cloud, fraud analytics), Manufacturing (smart-factory Gen AI), Retail & CPG (e-commerce platform modernization), Life Sciences (regulatory AI platforms) and Public Services (citizen-digital hubs).
5. Planned Expansions & CAPEX Deployment
- Global Delivery Centres: New development centres in Eastern Europe and Latin America to diversify talent pools.
- Innovation Labs: Inaugurated SAP Business AI Lab (Germany), AI Labs (New Jersey, Noida) to co-innovate with clients on high-value AI/ML solutions.
- Campus Upgrades: ₹1,108 Cr CAPEX in FY25 for data centres, security operations centres and digital-learning hubs .
6. Long-Term Financial Projections & Investor Returns
| (₹ Cr) / (%) | FY25A | FY30E* | FY35E** |
|---|---|---|---|
| Revenue | 117,055 | 174,000 | 258,000 |
| CAGR | — | 8.5% | 7.0% |
| PAT | 17,399 | 28,000 | 44,000 |
| CAGR | — | 10.0% | 8.0% |
| EPS | ₹64.16 | ₹100 | ₹160 |
| Target P/E | 25× | 25× | 25× |
| Implied Price | ₹1,600 | ₹2,500 | ₹4,000 |
- Based on steady digital/AI adoption
** Assuming market maturation, slower growth tailwinds
Projected Total Returns (incl. dividends):
- 5-year: ~15% p.a.
- 10-year: ~12% p.a.
- 15-year: ~10% p.a.
- 20-year: ~9% p.a.
7. Valuation & Credit Ratings
- Valuation: Trading at 24.9× P/E vs. large-cap IT peer average of ~23–24×. Premium reflects superior ROCE (31.9%), robust cash flows, high-growth AI pipeline.
- Dividend: 88 consecutive quarters of payout; current yield 3.43% supports income investors.
- Credit Rating: Stable credit profile; no rating changes announced in FY25 (Rating agencies continue to assign “AA”/“AA-” long-term ratings).
8. Investment Risks
- Deal Conversion Cycles: Large‐deal TCV may compress; reliance on shorter-tenor wins.
- Talent Retention: Elevated attrition in a tight labour market could pressure margins.
- Macro Uncertainties: Geopolitical tensions and discretionary IT spend volatility.
Conclusion
HCLTech’s Q4 FY25 performance underscores resilient revenue growth, margin resilience and world-class cash generation. With accelerated AI/digital investments, strategic acquisitions and strong guidance, the stock presents an attractive mix of growth and yield. Current valuation is justified by premium returns on capital and sustained dividend payouts.
Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult a financial adviser prior to any investment decision.
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