HCLTECH - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.2
| Stock Code | HCLTECH | Market Cap | 4,52,458 Cr. | Current Price | 1,666 ₹ | High / Low | 1,752 ₹ |
| Stock P/E | 36.9 | Book Value | 115 ₹ | Dividend Yield | 3.24 % | ROCE | 43.1 % |
| ROE | 32.6 % | Face Value | 2.00 ₹ | DMA 50 | 1,651 ₹ | DMA 200 | 1,604 ₹ |
| Chg in FII Hold | -0.43 % | Chg in DII Hold | 0.57 % | PAT Qtr | 3,682 Cr. | PAT Prev Qtr | 2,657 Cr. |
| RSI | 47.4 | MACD | 15.6 | Volume | 19,36,318 | Avg Vol 1Wk | 28,46,884 |
| Low price | 1,303 ₹ | High price | 1,752 ₹ | PEG Ratio | 9.17 | Debt to equity | 0.03 |
| 52w Index | 80.8 % | Qtr Profit Var | 4.42 % | EPS | 42.6 ₹ | Industry PE | 23.9 |
💹 Core Financials: HCL Technologies shows strong fundamentals with ROE at 32.6% and ROCE at 43.1%, highlighting efficient capital utilization. Debt-to-equity ratio of 0.03 indicates negligible leverage risk. Quarterly PAT rose from ₹2,657 Cr. to ₹3,682 Cr., reflecting healthy earnings momentum, though profit variation at 4.42% is moderate. Dividend yield of 3.24% ensures consistent shareholder returns, supported by stable cash flows.
📊 Valuation Indicators: Current P/E of 36.9 is significantly above the industry average of 23.9, suggesting overvaluation. Book value of ₹115 against CMP of ₹1,666 implies a high P/B ratio. PEG ratio of 9.17 signals expensive valuation relative to growth prospects. Intrinsic value appears lower than current market price, pointing to stretched valuations.
🏢 Business Model & Competitive Advantage: HCLTECH operates across IT services, engineering R&D, and digital transformation. Its competitive advantage lies in diversified offerings, strong client relationships, and global delivery capabilities. Recurring revenues from long-term contracts and brand strength provide resilience against market volatility.
💰 Entry Zone Recommendation: Considering DMA 50 at ₹1,651 and DMA 200 at ₹1,604, a favorable entry zone would be ₹1,450–₹1,550 during corrections. Current levels are slightly overvalued, making patience key for new investors.
📈 Long-Term Holding Guidance: Despite valuation concerns, HCLTECH remains fundamentally robust with strong returns, low debt, and consistent dividends. Long-term investors can hold, while fresh entries should wait for price dips to improve risk-reward balance.
Positive
- High ROE (32.6%) and ROCE (43.1%) reflect superior efficiency.
- Debt-to-equity ratio of 0.03 ensures financial stability.
- Dividend yield of 3.24% provides steady income.
- Quarterly PAT growth shows earnings resilience.
Limitation
- P/E ratio (36.9) is much higher than industry average (23.9).
- PEG ratio of 9.17 indicates expensive valuation relative to growth.
- Profit growth variation is modest at 4.42%.
Company Negative News
- Decline in FII holdings (-0.43%) signals reduced foreign investor confidence.
- Stock trading near 52-week high limits immediate upside potential.
Company Positive News
- Increase in DII holdings (+0.57%) reflects domestic institutional support.
- Strong quarterly earnings momentum.
- Consistent dividend payouts strengthen investor trust.
Industry
- IT services sector remains resilient with global demand for digital transformation.
- Industry P/E at 23.9 suggests peers trade at more reasonable valuations.
- Competition from Infosys, TCS, and Wipro keeps pricing pressure high.
Conclusion
⚖️ HCLTECH is a financially strong company with excellent return ratios and negligible debt, but valuations are stretched. Long-term investors can continue holding, while new investors should wait for corrections towards ₹1,450–₹1,550 for better entry opportunities.
Would you like me to also prepare a technical analysis HTML snippet (RSI, MACD, DMA trends) alongside this fundamental view so you get a complete investment picture?