>HCL TECHNOLOGIES (ANAND RATHI)

Key takeaways from analyst meet

■ Focus on large-deal wins. Management’s states that the outlook for EAS and RIM services is positive, supporting our view that these horizontals would contribute to HCL’s growth. Key
takeaways: sharper focus on infrastructure, and the company's strategy and ability to win large outsourcing deals.

■ New verticals, technologies. For new practices, HCL Tech is aggressively taking steps such as expanding sales and marketing teams, and building delivery centres for future technologies, clearly indicating that it is gearing up for the next level of competition.

■ Financial services – handling mature businesses. HCL Tech provides a total IT outsourcing solution, with greater emphasis on cross-selling. It is increasing its domain expertise to provide greater customer satisfaction. This should result in greater customer loyalty, advocacy, satisfaction and value.

■ Telecoms, Media and Entertainment – handling immature businesses. HCL Tech is providing focused vertical-based solutions by breaking up these verticals into micro-verticals. It is also investing in new domain-led services and focusing on moving up the value chain to more deeply penetrate the verticals.

■ Valuation. We re-rate HCL Tech from 15x FY11e earnings to 17x on its sharper focus on clients, technologies and profitability. Hence, we raise our target price to Rs425 (17x FY11e earnings of Rs25). We maintain our Buy rating.

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