HCL Tech stock in focus after company to acquire HPE’s telco business for up to $160 million

Synopsis: HCL Technologies Limited informed the stock exchange that it has signed an agreement to acquire the telco solutions business of Hewlett Packard Enterprise (HPE). 

The shares of one of the leading IT firms engaged in providing a wide range of software and IT infrastructure services were in focus after signing an agreement with HPE to acquire its TelcoSolutions business. 

With the market capitalization of Rs. 4,45,041 Crores, the shares of HCL technologies were trading at Rs. 1640 per equity share, it  is trading at an 18 percent discount from its 52-week high of Rs. 2012  per share and trading at a P/E of 26.2, where as Industry P/E  stands at 26.4

What is the NEWS

HCL Technologies has recently announced that it has signed an agreement to acquire the telco solutions business of Hewlett Packard Enterprise, whose purchase price will go upto 160 million USD. The telco solutions business provides telecom software and networks solutions to global  Communication Service Providers(CSP’s). The solutions provide support for more than 1 billion devices across 200 deployments worldwide. 

This acquisition will help HCLTech to expand engineering capability and the acquired intellectual property to accelerate 5G network transformation,network cloudification, NaaS, autonomous networking, SMO, AI-led network automation and AI-native networks for global CSPs. The transaction will happen in 100 percent cash and will be completed in 6 months from the date of signing.

Approximately 1500 specialists including 1225 employees and 260 contractors from various parts of the world including India, France, Spain, Japan, Italy etc will be transferred to HCLTech and its affiliates.

Company analysis and financials

HCL Technologies is primarily engaged in delivering industry-leading capabilities across AI, digital transformation, engineering, cloud, and software services, supported by a broad portfolio of technology services and products. The company works with clients across all major verticals, offering tailored solutions to sectors such as financial services, manufacturing, life sciences and healthcare, high-tech and semiconductor, telecom and media, as well as retail and consumer packaged goods (CPG). 

HCL Technologies collaborates closely with leading global technology vendors to deliver integrated solutions and operates on a worldwide scale, with offices and delivery centers across the Americas, Asia-Pacific, the Middle East, Africa, and Europe, enabling it to serve clients globally. 

Year on Year analysis: Revenue from operations has increased from Rs. 28,862 Crores to Rs. 31,942 Crores, up 10.6 percent. Operating profit has increased from Rs. 6369 Crores to 6545 Crores, up 2.76  percent and net profit has decreased from Rs. 4237 Crores to Rs. 4236 Crores, down 0.2 percent. 

Quarter on Quarter analysis:  Revenue from operations has increased from Rs. 30,349 Crores to Rs. 31,942 Crores, up 5.2 percent. Operating profit has increased from Rs. 6035 Crores to 6545 Crores, up 8.4 percent and net profit has increased from Rs. 3844  Crores to Rs. 4236 Crores, up 10.2 percent. 

Written by Vachan Kadli 

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