HCL Infosystems Ltd.
BSE Code/ NSE: 500179/ HCL-INSYS
Face Value: Rs 2
CMP: Rs 25.75
52 Weeks H/L (Rs): 66.75 – 25.75
Market Cap Rs (crore): 854
Promoter’s Holding: 62.89%
HCL Infosystems is India’s pioneer IT Services,Solutions & Distribution Company providing the choice of multi-brand globaltechnology products and the capability of best-in-class, business-aligned ITservices and solutions. The Company has alliances and partnership with Intel,Microsoft, Oracle, Cisco, IBM, SAMSUNG, Acer, Canon, McAfee etc. Onceupon a time this was darling stock for traders and investors. Its price went upto Rs290 level in FY08. Now it is available near Rs25. Many investors feel thatit is throw away price but as per financial analysis it is not cheap stock evenat this price.Just look at its financials. It has an equitybase of Rs65.84 crore. Reserve is around Rs169.50 crore which was around Rs1400crore in FY14. Current market cap is above Rs854crore. The Company has debtabove Rs925 crore in its books which is horrible.
The Company has posted LOSSES in last few years and debt remains at higher levels. Its group company HCL and its sister concern Company HCL Technologies is fourth largest IT services provider company. But HIL’s business model is different and it has low profit margin. Last year the Company has done right issue in ratio of 10:21 at Rs47 and raised funds but still it is in losses. It is Rs2 paid up stock and if we count with face value of Rs10 it is trading at Rs125 level which is very high valuation. It may show some bounce back of relief rally from this level in bullish market but as an investor it is not worth a stock for investment.
In our view, there are lots of opportunities available in the market after sharp crashes so don’t try to buy stocks like HIL whose future is not visible. If management merges this company with HCL Tech or take some other steps, its fortune may change but as of now it is not worth buying as long term investment.