HCL Technologies
BSE SENSEX
30,251
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
9,422
HCLT IN
1,427
Advantage ceding as organic growth aligns with industry
1,196.9/18.6
890/707
FY17 – mixed year ended on a stable note:
FY17 revenue grew 13.7% CC, of
which organic CC growth was ~8.7%, as per our calculations. EBIT margin of
-2/-3/0
20.3% expanded 20bp YoY, and net income of USD1,216.5m (adjusted for
1600
one-time tax reversal) rose 8.9% YoY. 4Q organic CC revenue growth of 1.3%
40.3
11 May 2017
4QFY17 Results Update | Sector: Technology
CMP: INR839 TP: INR960(+15%)
Growth woes catch up
Buy
Financials & Valuations (INR b)
2017 2018E
Y/E Mar
467.2
512.1
Net Sales
103.1
109.5
EBITDA
84.6
85.4
PAT
59.8
61.9
EPS (INR)
49.2
3.3
Gr. (%)
239.0
241.7
BV/Sh (INR)
27.5
25.4
RoE (%)
25.3
23.3
RoCE (%)
14.0
13.6
P/E (x)
3.5
3.5
P/BV (x)
2019E
561.8
119.9
93.6
67.6
9.3
270.3
26.0
24.0
12.4
3.1
Estimate change
TP change
Rating change
QoQ was in line with our estimate of +1%, and including acquisition
contributions, it was 3.8% QoQ CC. EBIT margin at 20% was in line, and net
income fell 2.2% QoQ to INR20b, a shade above our estimate of INR19.7b.
FY18 – organic revenue guidance is a dampener:
For FY18, HCLT guided for
revenue growth of 10.5-12.5% (CQGR of 1.85-2.6%). This was lower than our
estimate of 12-14%, which embedded ~4.5pp from acquisitions and 7.5-9.5%
organic. However, HCLT’s lower guidance came after two incremental
contributors (UFS and another IBM partnership). Factoring these, organic
growth guidance works out to ~5.5-7.5%. It retained the margin band
outlook of 19.5-20.5%, which we note, includes a fairly benign amortization
schedule of 15 years for USD600m + investments in IPRs licensed from IBM.
Watch out for trend in IMS and ER&D:
Adjusted for acquisitions, growth
appears to be softening further in IMS, which management attributed to
some ramp-up delays. Organically even ER&D services seem to be cooling
off, barring one quarter that saw some spurt in the last year and a half. The
two segments contribute ~59% to HCLT’s revenues and are the company’s
competitive edge in the industry. Failure to reverse the trend will put at risk
our thesis of growth visibility proposition at HCLT.
Valuation view:
After moderating our FY19 revenue estimate by 2% and
FY18/19 earnings estimates by 3.8% each (stronger INR), we expect USD
revenue CAGR of 9.4% and earnings CAGR of 8.2% over FY17-19. The stock
trades at 13.6/12.4x FY18/19E EPS. Our price target of INR960 discounts
FY19E earnings by 14x, implying 15% upside. While we remain
Buy
on
depressed valuations, triggers in the near term are limited. Any potential
surprise from a series of new investments in last few years will have some
gestation, if we were to go by the company’s FY18 revenue guidance.
FY17
1Q
2Q
3Q
1,691
1,722
1,745
6.5
1.9
1.4
113,360 115,190 118,140
15.9
14.1
14.2
34.4
33.6
33.9
12.1
11.8
11.7
25,210 25,110
26,280
22.2
21.8
22.2
20.6
20.1
20.4
2,530
2,350
2,310
21.0
21.1
21.5
20,430 20,150
20,710
6.1
-1.4
2.8
14.6
10.5
7.9
14.5
14.3
14.7
FY16*
4Q
1,817
4.1
120,530
12.7
33.7
11.8
26,490
22.0
20.0
2,150
11.5
20,250
-2.2
5.2
16.5
4,698
7.1
311,360
14.6
34.6
12.7
68,150
21.9
20.5
7,960
20.9
56,670
4.0
40.1
FY17E
6,975
11.9
467,220
14.2
33.9
11.8
103,090
22.1
20.3
9,340
18.8
84,570
13.5
59.8
Est.
4QFY17
1,810
0.4
3.7
41bp
120,518
0.0
12.7
1bp
33.4
32bp
11.5
24bp
26,386
0.4
21.9
0.4
20.2
-20bp
713
201.4
21.5 -1001bp
19,706
2.8
-4.8 262bp
2.4 282bp
13.8
(
/ bp)
Quarterly Performance (Consolidated)
Y/E June
Revenue (USD m)
QoQ (%)
Revenue (INR m)
YoY (%)
GPM (%)
SGA (%)
EBITDA (INRm)
EBITDA Margin (%)
EBIT Ma rgi n (%)
Other i ncome
ETR (%)
Adjusted PAT
QoQ (%)
YoY (%)
EPS
FY16*
FY15
4Q
1Q
2Q
3Q
1,538
1,545
1,566
1,587
3.2
0.5
1.4
1.3
97,770 100,970 103,410 106,980
16.1
15.6
11.4
15.4
34.2
34.4
34.6
34.9
12.8
12.5
13.0
12.7
21,000 22,110 22,250 23,790
21.5
21.9
21.5
22.2
20.2
20.6
20.0
20.8
2,120
2,410
3,550
2,000
18.6
21.3
20.9
20.5
17,820 18,230 19,190 19,250
5.8
2.3
5.3
0.3
-2.9
6.1
-0.2
14.3
12.6
12.9
13.6
13.6
*FY16 was a nine month year; Twelve months ended March 2016 are compared with twelve months ended March 2015 to make annual growth comparisons
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531

HCL Technologies
4QFY17: In-line performance
HCLT’s 4QFY17 CC revenue growth of 3.8% is marginally above our estimate of
3.4%.
In USD terms, revenue grew by 4.1% to USD1,817m v/s our expectation of
USD1,810m (+3.7% QoQ)
This is explained by ~1month revenues from GEOM acquisition, which implies
~60bp impact (we had factored GEOM from April 2017).
The impact of cross-currency movement on revenue growth was 30bp, which is
in-line with what we anticipated (30bp).
In INR terms, revenue grew by 2.0% QoQ to INR120.5b, against our expectation
of INR120.5b.
Exhibit 1: CC revenue growth of 3.8% QoQ; mostly driven by acquisitions
CC Revenues (USD m)
6.2
3.2
2.9
1555
1.2
1452 1522 1530 1534
CC Growth ( QoQ %)
6.0
2.7
2.8
3.0
3.8
1.9
4.0
1491
3.2
0.0
1434 1491
0.5
1.4
1.3
Reported Revenues (USD m)
Growth (QoQ %)
6.5
4.1
1.9
1.4
2.1
1.7
1578 1593 1683 1738 1774 1811
1538 1545 1566 1587 1691 1722 1745 1817
Source: Company, MOSL
The quarter included incremental revenue from the new IBM partnership: 0.6pp
(USD10m), Butler: 1.3pp (USD23m) and Geometric: 0.6pp (USD10m). Inorganic
growth added up to 2.5pp, implying organic CC growth of 1.3%. Our expectation
was of 1% CC organic growth.
In reported terms, Software Services grew 6.1% QoQ, to USD1,040m. The
increase in growth rate has been a result on incremental revenue from the
acquisitions of Butler and Geometric, which have both been in the Engineering
and R&D services space.
Growth in IMS was at 1.6% QoQ to USD706m. This brings the CQGR in IMS
revenue to 5.3%. This has gradually come-off over the last two quarters as the
Volvo deal integration is now behind, leaving a higher base.
BPS seized to decline in 3QFY17 and clocked a growth rate of 1.2% QoQ. It has
been a weak year for Business Services with overall revenue declining by 12%
YoY in CC terms.
In terms of constant currency, Application Services grew by 1.8% QoQ and
Engineering and R&D Services grew by 14.6% QoQ. Growth in Engineering and
R&D Services was driven by acquisitions.
11 May 2017
2

HCL Technologies
Exhibit 2: QoQ growth in services in USD terms (%)
Software Services
BPO
IMS
17.1
1.1
3.2
2.3
0.0
0.9
0.3
6.1
1.6
0.7
2.1
4.4
3.6
1.9
2.0
3.9
0.4
1.7
5.4
4.7 0.5
6.9
2.4
0.1
0.7
2.3 0.3
3.5
1.9
(0.2)
(0.5)
(4.9)
(15.6)
Source: Company, MOSL
EBIT margin at 20.0%, declined by 40bp QoQ, compared to our estimate of
20.2%, -20bp QoQ. This was also led by an increase in amortization, led by a
higher number of IP deals being signed with IBM. EBITDA margin was lower by
20bp to 22.0%.
Exhibit 4: Utilization now at 85.7%; steady in the 84-86%
range
Gross Addition
Blended Utilization (%)
Exhibit 3: EBITDA margin in line with expectations
EBITDA margin (%)
SG&A as % of sales (RHS)
11.7
12.0
13.0
12.7 12.8 12.5
12.7
82.7 82.9 81.9
12.1
11.8 11.7 11.8
84.7 85.6 85.8 85.3 84.6 85.7
83.5 83.6
25.1 25.0 22.6 21.5 21.9 21.5 22.2 22.2 21.8 22.2 22.0
11631
1173411041 9448 7889 6234 9280 10515 9083 8467 10605
Source: Company, MOSL
Source: Company, MOSL
PAT at INR23.3b grew by 12.4% QoQ, and was higher than our estimate of
INR19.7b (-4.8% QoQ) on account of higher than expected other income, and
lower tax.
There was a reversal of tax provision to the tune of INR3b relating to prior years,
which led to an ETR of 11.5%. Excluding the one-off, PAT would have declined by
2.2% QoQ.
The company declared a dividend of INR6 per share.
Segment-wise performance in CC terms: Acquisitions drive growth in
Manufacturing and Engineering and R&D Services
Amongst geographies, growth during the quarter was driven by RoW (+15.8%
QoQ CC) and Americas (+5.3% QoQ CC). Revenue from Europe declined by 3%
QoQ post a strong 3Q.
11 May 2017
3

HCL Technologies
Exhibit 5: Strong growth in Americas and RoW
Geographies
Americas
Europe
RoW
Contr.
to rev. (%)
62.6
27.7
9.7
CC QoQ
Gr. (%)
5.3
-3.0
15.8
CC YoY
Gr. (%)
15.0
17.8
18.3
CC LTM
YoY Gr. (%)
14.8
15.0
2.5
Source: MOSL, Company
Smaller verticals have led growth in the last four quarters. However, the trend in
3QFY17 was encouraging with strength seen in Financial Services (24% of
revenue; 4.5% QoQ CC) and in Manufacturing (34% of revenue; 8.3% QoQ CC).
There was a decline seen in the verticals of Retail & CPG (-6.9% QoQ CC),
Telecom, Media, Publishing & Entertainment (-3.3% QoQ CC) and Lifesciences &
Healthcare (-2.9% QoQ CC).
Contr.
to rev. (%)
24.2
34.6
9.2
8.4
11.5
11.7
CC QoQ
Gr. (%)
3.0
6.3
2.1
-2.1
0.1
8.1
CC YoY
Gr. (%)
13.4
27.4
17.2
-2.6
3.5
22.4
CC LTM
YoY Gr. (%)
4.9
17.0
21.4
5.8
11.1
31.3
Exhibit 6: Strong growth in Financial Services, Manufacturing and Public Services
Verticals
Financial Services
Manufacturing
Retail & CPG
Telecom MP&E
Life Sciences & Healthcare
Public Services
Source: MOSL, Company
In terms of Services, growth during the quarter was led by Engineering and R&D
Services, +7.1% QoQ CC. Apart from organic traction, growth here was also led
by some of the partnerships struck by HCLT in recent quarters.
Application Services grew by 2.0% QoQ CC, with continued pressure in ERP.
However, the company alluded to some easing of ERP pressures as
opportunities in cloud migration and legacy modernization pick up pace.
Business Services revenue which was under pressure in the beginning of the
year has stabilized. The service line grew by 2.9% QoQ CC.
Growth in IMS remains strong on a YoY basis (28.3% YoY CC) on account of the
acquisition of Volvo.
Contr.
to rev. (%)
36.8
38.8
3.9
20.5
CC QoQ
Gr. (%)
1.8
0.9
0.2
14.6
CC YoY
Gr. (%)
7.2
24.8
-11.7
26.0
CC LTM
YoY Gr. (%)
5.9
27.4
-12.2
11.7
Exhibit 7: ER&D led growth among services (Geometric and Butler are both in this area)
Services
Application Services
IMS
BPO
Engg and R&D Services
Source: MOSL, Company
The company also disclosed its performance in terms of its Mode 1, Mode 2 and
Mode 3 strategy. The share of Mode 2 and Mode 3 together stood at 18.6% in
FY17.
Mode 1: Core Services in the areas of Applications, Infrastructure, BPO and
ER&D
Mode 2: Next-Generation Services; Digital & Analytics, IoT WoRKS, Cloud Native
Services and Cybersecurity & GRC Services
Mode 3: Products & Platforms
11 May 2017
4

HCL Technologies
Exhibit 8: Mode 2 and Mode 3 contribute to 18.6% of revenue for FY17
Services
Mode 1
Mode 2
Mode 3
FY16 contribution FY17 contribution
Growth (YoY, %)
(%)
(%)
84.1
81.4
8.3
12.3
12.8
16.4
3.6
5.8
80.2
Source: MOSL, Company
Another partnership with IBM
HCLT announced another IP partnership with IBM during the quarter, as part of
its Mode 3 (Products & Platforms) strategy.
The partnership this quarter covers additional products in the areas of
Information Management and Database Management Systems. These products
include those under the product family of Informix.
The two companies will collaborate on future roadmap and enhancements of
those products and extend them to cloud and IoT applications.
HCLT has committed to invest ~USD80m in the extended partnership; bringing
the total over the last three quarters (and four partnerships) to USD635m.
In intends to create a product revenue stream, in line with which investments,
and partnerships in products and platforms are expected to continue going
forward.
Exhibit 9: Recent partnerships in Mode 3
Partnership
IBM - deal 1
IBM - deal 2
IBM - Deal 3
IBM - Deal 4
Scope
Automation and DevOps solutions
API/Web Service Enablement for Mainframes
Application Security, B2B Data Transformation, Testing
Automation and Mainframe Management tools
Information Management and Database Management Systems
Committed investment
(USDm)
345
55
155
80
Expected revenue
(USDm)
110
11
40
30
Source: MOSL, Company
Acquired Urban Fulfillment Services
Earlier during the quarter, HCLT entered into an agreement to acquire 100%
stake in Urban Fulfillment Services, a provider of mortgage business process and
fulfillment services.
The company was founded in 2002, has over 350 professionals and operates out
of three centres in the US.
The total consideration for this transaction is up to USD30m, including
contingent payments subject to certain financial milestones. The deal is
expected to be completed by June 2017.
Guidance for FY18
FY18 will include the full integration of several acquisitions with cumulative
contribution of ~5pp to revenue growth.
So, guidance of 10.5-12.5% in CC terms thus implies organic CC revenue
guidance of 5.5-7.5% (mid-point of 6.5%). This is ~2pp below our expected range
for organic.
The company achieved ~9.2% organic CC revenue growth in FY17.
11 May 2017
5

HCL Technologies
The organic CC CQGR achieved in FY17 was 2.2%. The required CC CQGR for
achieving 5.5-7.5% organic growth would be 1.2-2.0%, mid-point of 1.6%, which
is considerably lower compared to the previous year.
EBIT margin guidance range of 19.5-20.5% for the full year was maintained
despite the integration of acquisitions and despite the appreciation of USD/INR.
The company has assumed a rate of 65.5 INR/USD for the outlook.
Exhibit 10: 5.5-7.5% YoY CC organic growth expected
10.5%;
Overall CC
growth
5.0%
7.5%
5.5%
Revenue growth
(CC, YoY, %, organic)
Acquisitions
Cross-currency
impact (YoY, bp)
Revenue growth
(CC, YoY, %, organic)
Acquisitions
Cross-currency
impact (YoY, bp)
Source: Company, MOSL
9.9%;
Overall USD
growth
-0.9%
12.5%;
Overall CC
growth
5.0%
11.9%;
Overall USD
growth
-0.9%
Exhibit 11: Acquisition summary - HCLT
FY17
Incremental
contribution
to revenue
(USDm)
7
25
160
55
6
10
-
23
10
-
296
FY18
Incremental
contribution
to revenue
(USDm)
-
-
-
55
6
30
30
69
110
30
330
C2SiS
Powerstream
Volvo
IBM - deal 1
IBM - deal 2
IBM - Deal 3
IBM - Deal 4
Butler
Geometric
UFS
Total
Annual
revenue
(USDm)
14
50
160
110
11
40
30
92
120
30
Integration
2 quarters
2 quarters
4 quarters
2 quarters
2 quarters
1 quarter
-
1 quarter
1 month
-
Contribution
to growth
(pp)
0.1%
0.4%
2.6%
0.9%
0.1%
0.2%
0.0%
0.4%
0.2%
0.0%
4.7%
Integration
-
-
-
2 quarters
2 quarters
3 quarters
4 quarters
3 quarters
11 months
4 quarters
Contribution
to growth
(pp)
0%
0%
0%
1%
0%
0%
0%
1%
2%
0%
5.0%
Source: Company, MOSL
Change in estimates
While the quarter’s growth was largely in-line with estimates, the implied
organic guidance was below expectations by 1.5pp. This has resulted in us
cutting our revenue assumptions despite the addition of UFS and another
partnership with IBM, which together would increase estimates by ~1%.
Accommodating for these factors, our revenue estimates have been reduced by
0.2/2.0% for FY18/19. We now expect 10.8/8.1% USD revenue growth
respectively.
For FY17, EBIT margin at 20.3% has been towards the higher end of the guided
range of 19.5-20.5%. The company maintained this band despite an assumption
of an INR/USD rate of 65.5, versus average of 67 in FY17.
11 May 2017
6

HCL Technologies
This has led us to reduce our EBIT margin estimates by 60/40bp for FY18/19E.
We now expect the company to report an EBIT margin of 19.5/19.4%
respectively.
Consequently, our earnings estimates have been revised downwards by 3.8% for
FY18/19E each, and our revised EPS stands at INR61.9/67.6 respectively.
Exhibit 12: Change in estimates
FY17
INR/USD
USD Revenue - m
USD revenue growth
EBITDA Margin
EBIT Margin
EPS - INR
EPS Growth
67.0
6,975
11.9%
22.1%
20.3%
59.8
13.5%
Revised
FY18E FY19E
66.3
7,729
10.8%
21.4%
19.5%
61.9
3.3%
67.3
8,354
8.1%
21.3%
19.4%
67.6
9.3%
FY17
67.1
6,968
11.7%
22.0%
20.3%
57.2
8.4%
Earlier
FY18E
67.6
7,747
11.2%
21.6%
20.0%
64.3
12.4%
FY19E
68.5
8,522
10.0%
21.4%
19.9%
70.3
9.3%
FY17
-0.1%
0.1%
12bp
2bp
-5bp
4.7%
Change
FY18E FY19E
-2.0%
-0.2%
-36bp
-23bp
-58bp
-3.8%
-1.8%
-2.0%
-193bp
-5bp
-41bp
-3.8%
Source: MOSL
Takeaways from management commentary
Shift in spend:
While technology budgets haven’t been seeing any reduction,
there has been a notable change in the spend pattern. An increasing amount is
being spent on newer technologies, and HCLT’s strategy has been attempting to
get in sync with that. While Mode 1 constitutes of core services, Mode 2 has
been focused on new high-growth opportunities and Mode 3 on products and
partnerships.
Movement in the IMS market:
The rebid market in IMS has been buoyant.
However, in the last couple of quarters, there has been some softness in IMS
resulting out of delays in decision making. Currently, performance is not being
hampered by fundamental changes, but reflects the outlook in deals specific to
HCLT. Over the next 4-5 years though, the market is likely to aggressively move
towards cloud adoption.
Mode 2 will pivot growth:
Through Mode 2, HCLT focuses on high-growth
opportunities in the areas of Digital & Analytics, IoT WoRKS, Cloud Native
Services and Cybersecurity & GRC Services. This area grew by 16.4% over the
previous year, with most of it being organic. Most of HCLT’s top accounts are
already seeing an adoption of Mode 2 services.
Partnership with IBM extended:
The parternship with IBM got extended to a
few more products during the quarter. Additional products are in the areas of
Information Management and Database Management Systems. These products
include those under the product family of Informix. The two companies will
collaborate on future roadmap and enhancements of those products and extend
them to cloud and IoT applications. HCLT has committed to invest ~USD80m in
the extended partnership.
11 May 2017
7

HCL Technologies
Valuation view
HCLT’s differentiated positioning in IMS has helped it grow ahead of the industry
average in the last few years and additionally its capabilities in Engineering
Services have compounded to that in recent years.
While FY16 was relatively muted, led by delayed transition in IMS deals and
some softness in select verticals; FY17 saw improvement reflected in revenue
growth for IMS. However, consistent 0-1% QoQ growth in Application Services
(40% of total revenue) and volatility in large verticals like BFSI and
Manufacturing have been weighing on overall performance.
1. IMS, which grew at a CAGR of 30% over FY10-15, and contributed 46% of
HCLT’s incremental revenues during this period, saw some slowness in YoY
growth momentum in recent quarters. While this raised fears of competitive
intensity taking its toll, deal signings have remained healthy, and we expect
growth in IMS to remain strong at least in the foreseeable future. HCLT
enjoys a healthy lead as far as scale in IMS is concerned, with FY17 revenue
of USD2.7b+.
2. Total estimated spend on Engineering Services and R&D is USD1.4t, of which
exports from India are pegged at merely USD12.5b. ~50% of this is serviced
out of captives, while the remainder is outsourced to third party vendors
like HCLT. As per Nasscom, ER&D exports will grow to ~USD50b by 2020.
With FY17 revenues of USD1.3b+, HCLT is the largest provider of outsourced
Engineering Services (20% of HCLT’s revenue). Its acquisition of Butler and
Geometric further augment its capabilities and open doors in the verticals of
automotive, industrial and aerospace, thus improving prospects of
advantages in the mid-long term.
Its FY18 guidance of 10.5-12.5% CC revenue growth has been lower than
expectations of 12-14%. Lower organic growth expectations are likely to have
been a result of slower ramp-up in IMS and cooling-off of organic growth in
ER&D services. The two segments contribute ~59% to HCLT’s revenues and are
the company’s competitive edge in the industry. Failure to reverse the trend will
put at risk our thesis of growth visibility proposition at HCLT.
HCLT trades at 13.6x/12.4x FY18/F19E EPS. We expect it to post USD revenue
CAGR of 9.4% over FY17-19E and EPS at a CAGR of 8.2%, during this period. Our
one-year target price discounts forward earnings by 14x. Return on significant
FY17 investments (acquisitions + 4 IBM partnerships) heightens the uncertainty,
factoring which we value HCLT at 14x FY19E EPS.
Consequently, our price target of INR960 implies 15% upside. A pick-up in
organic growth would be the key trigger for the stock.
Key triggers
Sustained uptick in growth in Application Services/Engineering
Return to industry-leading growth on an organic basis
Material growth uptick in Mode 2 resulting in enhanced overall performance
Key risks
Increased uncertainty around heavy-investment partnerships
Pull back in IMS growth amid competitive intensity
Continued drag on organic growth
8
11 May 2017

HCL Technologies
Exhibit 13: HCLT 1 year forward PE chart
29
24
19
14
9
4
5.8
14.3
12.8
PE (x)
Peak(x)
Avg(x)
Min(x)
24.7
Exhibit 14: HCLT 1-year forward PB chart
5.5
4.5
3.5
2.5
1.5
0.5
1.0
3.3
3.5
PB (x)
Peak(x)
Avg(x)
5.2
Min(x)
Source: Company, MOSL
Source: Company, MOSL
11 May 2017
9

HCL Technologies
Story in charts
Exhibit 15: Opportunity from churn in rebid market
continues to remain healthy…
Churn market oppurtunity (USD b)
Dec 2011 estimates
Dec 2013 estimates
Exhibit 16: …and HCLT continues to reap its benefits through
deal wins…
IMS Revenues
% of overall revenues
% of incremental revenues
75
67
67
50
23
30
24
30 29
34
35 36 36
40
41
16
42
48
28
46
24
34
54
2017
26
2018
23 21
2014
2015
2016
Source: Company, MOSL
Source: Company, MOSL
Exhibit 17: Increased investments in ER&D…
Incremental Revenue Contribution (%)
IMS
67.3
67.4
50.4
30.3
15.9
29.5
21.6
8.6
FY12
FY13
9.3
FY14
FY15
FY16*
36.5
21.6
34.7
17.8
ER&D
74.8
Exhibit 18: …And higher focus towards Mode 2 and Mode 3
Mode 1
3.6
12.3
Mode 2
Mode 3
5.8
12.8
84.1
81.4
FY11
FY17
FY16
FY17
Source: Company, MOSL
Source: Company, MOSL
Exhibit 19: Comfort on margins after reinstatement of
guidance band
EBIT margin (%)
14.8
SGA (%)
Exhibit 20: PAT growth has been bogged down by margin
stress
PAT (INR m)
63.9
YoY growth (%)
84,57085,427
56,670
40,250
24,553
63,709
11.5
6.3
11.9
1.0
9.5
93,568
14.0
13.3
12.3
12.3
12.7
11.8
10.8
10.9
52.6
36.8
16,092
58.3 71,057
13.4
16.0
19.7
24.1
22.3
20.5
20.3
19.5
19.4
FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E
FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E
Source: Company, MOSL
Source: Company, MOSL
*FY16 was a nine month year; Twelve months ended March 2016 are compared with twelve months ended March 2015 to make annual
growth comparisons
11 May 2017
10

HCL Technologies
Operating metrics
Exhibit 21: Comparative Valuation
1QFY15 2QFY15
Service Line wise (%)
Application services
Engineering and R&D Services
Infrastructure Services
BPO Services
Vertical wise (%)
BFSI
Manufacturing
Retail & CPG
Telecom MP&E
Life Sciences
Public Services
Others
Geography wise (%)
US
Europe
ROW
Client wise (%)
Top 5 clients
Top 10 clients
Top 20 clients
QoQ Growth (%)
Service Line wise
Application services
Engineering and R&D Services
Infrastructure Services
BPO Services
Vertical wise
BFSI
Manufacturing
Retail & CPG
Telecom MP&E
Life Sciences
Public Services
Others
Geography wise
US
Europe
ROW
Client wise
Top 5 clients
Top 10 clients
Top 20 clients
43.4
17.1
34.5
5.0
28.2
32.3
9.5
8.7
9.8
9.3
2.2
56.3
32.3
11.4
14.4
23.1
33.0
42.4
18.3
34.4
4.9
26.6
32.9
9.7
8.4
11.1
9.5
1.8
57.4
31.7
10.9
14.0
22.3
32.4
3QFY15
41.5
18.9
34.5
5.1
26.1
33.4
8.4
9.0
11.2
10.4
1.5
57.5
31.0
11.5
13.5
21.8
32.2
4QFY15
40.9
18.7
35.3
5.2
26.0
32.7
8.8
9.5
12.0
9.7
1.3
58.6
30.4
11.0
13.2
21.7
32.4
1QFY16
40.4
19.2
35.1
5.3
26.1
32.5
8.8
9.6
12.4
10.0
0.6
58.7
31.7
9.6
13.6
21.9
32.4
2QFY16
40.4
18.6
35.5
5.5
25.9
31.5
9.5
9.7
12.2
10.6
0.6
61.0
29.9
9.1
13.6
21.7
32.4
3QFY16
39.9
18.7
36.2
5.2
25.0
31.4
9.2
9.9
12.8
11.1
0.5
62.5
28.4
9.1
13.6
21.8
32.2
1QFY17
38.3
17.7
39.8
4.1
23.6
33.2
10.0
9.1
11.9
11.7
0.5
59.9
31.4
8.7
13.9
21.8
31.7
2QFY17
37.8
17.8
40.3
4.1
24.1
32.2
10.4
9.4
12.6
10.9
0.4
61.9
29.3
8.8
13.8
21.6
31.8
3QFY17 4QFY17
37.5
18.6
39.8
4.0
24.3
33.9
9.4
8.9
12.0
11.2
0.4
61.9
29.6
8.5
14.2
21.7
31.9
36.8
20.5
38.8
3.9
24.2
34.6
9.2
8.4
11.5
11.7
0.3
62.6
27.7
9.7
14.7
22.1
32.9
0.0
7.6
1.9
-0.2
1.2
4.4
14.3
-0.4
-2.1
-6.1
-6.7
5.7
-0.3
-8.9
-0.2
-0.7
-0.2
1.6
11.5
3.6
2.0
-1.9
5.9
5.6
0.4
17.9
6.2
-15.8
6.0
2.1
-0.6
1.1
0.4
2.1
-2.1
3.0
0.4
4.1
-2.0
1.3
-13.4
7.1
0.8
9.3
-12.0
0.0
-2.6
7.9
-3.6
-2.3
-0.6
1.6
2.0
5.5
4.8
2.8
1.0
8.1
8.9
10.5
-3.8
-10.6
5.1
1.2
-1.3
0.9
2.7
3.8
-0.7
3.3
-0.1
2.8
0.8
-0.2
0.5
1.5
3.8
3.6
-53.6
0.6
4.8
-12.3
3.5
1.4
0.5
1.4
-1.8
2.6
5.2
0.6
-1.7
9.5
2.5
-0.2
7.5
1.4
5.4
-4.4
-3.9
1.4
0.5
1.4
0.1
1.9
3.3
-4.2
-2.2
1.0
-1.9
3.4
6.3
6.1
-15.5
3.8
-3.7
1.3
1.3
1.8
0.7
2.2
0.8
17.1
-16.0
0.6
12.6
15.8
-2.1
-1.0
12.3
6.5
2.1
17.8
1.8
8.9
6.5
4.9
0.5
2.4
0.0
3.1
4.0
-1.2
5.9
5.2
7.8
-5.1
-18.5
5.3
-5.0
3.0
1.1
0.9
2.2
0.6
6.1
0.2
-0.5
2.2
6.7
-8.4
-4.0
-3.5
4.1
1.4
1.4
2.4
-2.1
4.3
1.8
1.7
2.1
14.6
1.4
0.9
3.7
6.2
1.9
-1.8
-0.2
8.7
-21.9
5.3
-2.6
18.8
7.8
6.0
7.4
Source: Company, MOSL
11 May 2017
11

HCL Technologies
Financials and Valuations
Key assumption
Y/E Mar
INR/USD Rate
Revenues (USD m)
IMS Revenue (USD m)
Software Services Rev (USD m)
Total Headcount
Net Addition
Per Capita Productivity (USD)
2012
50.7
4,152
1,005
2,957
84,319
7,273
49,237
2012
210,312
32.2
39,396
18.7
5,641
33,755
-1,170
0
32,585
8,032
24.6
0
24,553
52.6
2012
2,762
104,552
107,314
19,222
126,536
57,859
33,084
24,775
69,453
19,723
75,325
53,440
6,673
15,212
62,740
12,585
126,536
2013
54.9
4,687
1,367
3,114
85,505
1,186
54,810
2013
257,336
22.4
57,536
22.4
6,726
50,810
1,570
0
52,380
12,130
23.2
0
40,250
63.9
2013
2,777
140,168
142,945
6,960
149,905
67,093
39,810
27,283
72,046
42,991
88,159
61,767
7,321
19,071
80,574
7,585
149,905
2014
61.4
5,360
1,820
3,293
91,691
6,186
58,454
2014
329,180
27.9
86,670
26.3
7,320
79,350
-160
0
79,190
15,480
19.5
1
63,709
58.3
2014
2,793
198,021
200,814
7,509
208,323
78,595
47,130
31,465
74,954
89,948
108,537
77,086
10,206
21,245
96,581
11,956
208,323
2015
62.3
5,952
2,064
3,588
106,107
14,416
56,097
2015
370,620
12.6
87,020
23.5
4,440
82,580
7,559
1,551
91,690
19,080
20.8
2
72,608
11.5
2015
2,797
244,713
247,510
4,690
252,200
89,770
51,570
38,200
82,700
104,450
131,760
94,860
13,520
23,380
104,910
26,850
252,200
2016
66.3
4,698
1,673
2,775
104,896
-1,211
59,714
2016
311,360
-16.0
68,150
21.9
4,450
63,700
7,960
0
71,660
14,990
20.9
0
56,670
-20.2
2016
2,799
277,422
280,221
9,732
289,953
99,251
56,020
43,231
102,983
112,837
138,624
107,228
7,293
24,103
107,720
30,904
289,955
2017
67.0
6,975
2,767
3,927
115,973
11,077
60,142
2017
467,220
50.1
103,090
22.1
8,340
94,750
9,340
0
104,090
19,520
18.8
0
84,570
49.2
2017
2,802
332,102
334,904
5,417
340,321
143,499
56,020
87,479
110,701
115,119
151,023
108,026
13,165
29,832
124,002
27,021
340,320
2018E
66.3
7,729
3,019
4,440
127,473
11,500
60,635
2018E
512,100
9.6
109,476
21.4
9,779
99,697
9,127
0
108,824
23,397
21.5
0
85,427
1.0
2018E
2,806
336,207
339,013
5,417
344,430
148,295
56,020
92,275
114,128
109,339
165,827
118,403
14,838
32,587
137,140
28,687
344,430
2019E
67.3
8,354
3,238
4,804
138,873
11,400
60,155
2019E
561,836
9.7
119,918
21.3
10,682
109,236
9,960
0
119,196
25,627
21.5
0
93,568
9.5
2019E
2,808
376,758
379,567
5,417
384,984
152,408
56,020
96,388
118,102
103,559
216,343
129,902
50,660
35,780
149,408
66,935
384,984
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Change (%)
(INR Million)
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Intangibles
Investments
Current Assets
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Net Current Assets
Total Assets
(INR Million)
11 May 2017
12

HCL Technologies
Financials and Valuations
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2012
17.5
21.6
77.7
6.0
34.3
2013
28.6
33.3
103.0
6.0
21.0
2014
45.1
50.3
143.8
11.0
24.4
2015
50.4
54.5
177.0
16.0
31.8
2016
40.1
43.3
200.2
17.0
42.4
2017
59.8
65.7
239.0
24.0
40.1
2018E
61.9
68.9
241.7
28.0
45.3
2019E
67.6
75.3
270.3
32.0
47.3
47.9
38.9
10.8
5.5
29.2
0.7
25.6
20.6
25.3
9.0
75.9
0.1
2012
39,396
-9,657
-6,410
-8,032
0
15,297
-15,777
-480
6,727
0
-9,050
8,118
-2,018
-10,871
-4,772
1,475
5,198
6,673
29.3
25.2
8.1
4.4
19.5
0.7
32.2
26.5
34.2
9.9
81.7
0.0
2013
57,536
-2,415
3,843
-12,130
0
46,834
-9,412
37,422
-21,463
0
-30,875
5,134
-12,262
-8,183
-15,311
648
6,673
7,321
18.6
16.7
5.8
3.3
12.4
1.3
37.1
35.3
53.8
11.2
77.0
0.0
2014
86,670
-999
-950
-15,480
0
69,241
-13,412
55,829
-47,493
0
-60,905
12,155
549
-18,156
-5,452
2,884
7,321
10,206
16.7
15.4
4.7
2.9
12.2
1.9
31.7
29.2
48.3
10.6
84.7
0.0
2015
87,020
-7,200
-9,555
-19,080
0
51,185
-10,172
41,013
-16,527
0
-26,699
1,040
-2,819
-19,393
-21,171
3,315
10,206
13,520
20.9
19.4
4.2
2.6
11.7
2.0
21.5
19.9
30.6
7.6
118.5
0.0
2016
68,150
-8,129
-10,326
-14,990
0
34,705
-21,635
13,070
-8,342
0
-29,977
4,764
5,042
-20,763
-10,958
-6,230
13,520
7,291
14.0
12.8
3.5
2.3
10.2
2.9
27.5
25.3
37.8
7.1
84.1
0.0
2017
103,090
1,671
9,865
-19,520
0
95,106
-61,977
33,129
-2,392
0
-64,369
10,758
-4,315
-31,304
-24,862
5,875
7,291
13,166
13.6
12.2
3.5
2.1
9.7
3.3
25.4
23.3
34.1
5.7
80.7
0.0
2018E
109,476
-3,427
-1,150
-23,397
0
81,502
-14,575
66,927
6,937
0
-7,638
-34,973
0
-37,218
-72,191
1,672
13,166
14,838
12.4
11.1
3.1
1.8
8.6
3.8
26.0
24.0
35.7
6.0
80.7
-0.1
2019E
119,918
-3,974
-3,766
-25,627
0
86,552
-14,795
71,757
7,121
0
-7,674
16
0
-43,070
-43,054
35,823
14,838
50,661
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
(INR Million)
11 May 2017
13

HCL Technologies
Corporate profile
Company description
KPIT Cummins is a leading technology solutions
partner for global manufacturing corporations, with
special focus on automotive, energy & utilities,
industrial
equipments
and
semiconductor
industries. With over USD463m revenue (LTM) and
9,933 employees, company continues to focus on
its chosen areas to grow, with equal thrust on
organic and inorganic approaches.
Source: MOSL/Bloomberg
Exhibit 1: Sensex rebased
Exhibit 2: Shareholding pattern (%)
Mar-17
Promoter
DII
FII
Others
59.7
7.7
24.6
8.0
Dec-16
60.3
8.0
24.3
7.4
Mar-16
60.4
5.7
26.9
7.0
Source: Capitaline
Exhibit 3: Top holders
Holder Name
ICICI Prudential Life Insurance Company Ltd
LIC of India
Artisan International Value Fund
NA
NA
% Holding
1.4
1.4
1.1
0.0
0.0
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Shiv Nadar
Manish Anand
Designation
Chairman & Chief
Strategy Off.
Company Secretary
Exhibit 5: Directors
Name
Roshni Nadar Malhotra
Amal Ganguli
R Srinivasan
Sosale Shankara Sastry
Thomas Sieber
Name
Sudhindar Khanna
K M Mistry
Robin Abrams
Subramanian Madhavan
Nishi Vasudeva
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Chandrasekaran Associates
S R Batliboi & Co LLP
Type
Secretarial Audit
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY18
FY19
MOSL
forecast
60.9
66.6
Consensus
forecast
58.0
63.3
Variation (%)
5.0
5.2
Source: Bloomberg
Source: Capitaline
11 May 2017
14

HCL Technologies
NOTES
11 May 2017
15

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it
and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an
offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution
and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into
account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their
particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses
on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate
investors on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of
gathering, applying and interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and
other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and
investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things,
may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the
financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other
related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent
of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a
company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon,
etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees
from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or
employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly
available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party
either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or
developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be
regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may
arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any
matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own
investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this
report or for any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any
compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned
in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against Motilal Oswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry
and adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have
requested to SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of Motilal Oswal Securities Limited -Click
here to access detailed report
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research
receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
HCL Technologies
Disclosure of Interest Statement
Analyst ownership of the stock
No
Served as an officer, director or employee -
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has
an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of
Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation
of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not
conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is
not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States.
Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S.
persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors").
This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors
and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S.
registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and
therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in
the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
HCL TECHNOLOGIES
Motilal Oswal Securities Ltd
11 May 2017
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
16