HCL Technologies acquired Trygstad Technical Services, a company with expertise in areas like IoT, embedded systems, and intelligent systems. The acquisition enhances HCL's ability to provide additional solutions to software vendors. Trygstad is a small company with under 400 employees and estimated annual revenue of under $4 million. The financial details of the acquisition were not disclosed but it is believed to be valued at less than 1.5 times Trygstad's sales. The acquisition is assessed to have limited financial impact on HCL but strengthens its capabilities.

1.
HCL Technologies
Acquired Trygstad – Strengthening IoT capabilities
July 14, 2015
PrabhudasLilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the
Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.
Please refer to important disclosures and disclaimers at the end of the report
Event Update
Shashi Bhusan
shashibhusan@plindia.com
+91‐22‐66322300
Hussain Kagzi
hussainkagzi@plindia.com
+91‐22‐66322242
Rating Accumulate
Price Rs961
Target Price Rs1,070
Implied Upside 11.3%
Sensex 27,961
Nifty 8,460
(Prices as on July 13, 2015)
Trading data
Market Cap. (Rsbn) 1,332.3
Shares o/s (m) 1,386.6
3M Avg. Daily value (Rs m) 3574.6
Major shareholders
Promoters 60.59%
Foreign 29.59%
Domestic Inst. 3.72%
Public & Other 6.10%
Stock Performance
(%) 1M 6M 12M
Absolute 7.2 21.4 29.0
Relative 1.4 19.4 17.3
How we differ from Consensus
EPS (Rs) PL Cons. % Diff.
2016 57.0 52.1 9.3
2017 62.0 57.3 8.3
Price Performance (RIC: HCLT.BO, BB: HCLT IN)
Source: Bloomberg
0
200
400
600
800
1,000
1,200
Jul‐14
Sep‐14
Nov‐14
Jan‐15
Mar‐15
May‐15
Jul‐15
(Rs)
HCL Tech (HCLT) has entered into a definitive asset purchase agreement to acquire
certain assets of Trygstad Technical Services Inc. ("TrygTech") in an all cash deal. The
financial details of the transaction were not disclosed. TrygTech is a niche company
with expertise in the areas of core engineering (including operating system), Internet
of Things, Embedded Systems and Intelligent Systems. With this acquisition, HCLT
enhances its ability to provide additional value and turnkey solutions to ecosystems
of ISVs. We see this acquisition to have limited impact on the financials of HCLT.
 TrygTech – Expertise in IoT, OS, Embedded Systems & Intelligent Systems:
TrygTech offers software and hardware designs (based on Windows, Windows
Embedded, .NET Micro Framework and Linux platforms) that connect smart
embedded devices with BI solutions. Using these, device OEMs deliver products
with smaller footprints, faster boot times, longer battery life, secure
connectivity, and real‐time performance. These designs are used in mobile
devices, kiosks, home/industrial automation, network appliances, and
healthcare solutions. It’s Project management processes ensures that products
get to production quickly and efficiently, which reduces your time‐to‐market
and overall development costs. The company can provide a complete turnkey
solution, or help you get over that key design hurdle. TrygTech delivers designs
to Mobile Devices, Kiosk and Point of Sale Terminals, Home and Industrial
Automation, Medical Devices and Network Appliances.
 Key financial details of Trygstad: Headquartered in Washington (the USA),
TryTech was founded in 2002. The company did not reveal what assets were
purchased or the deal size, but called it a strategic acquisition. According to
media reports, TrygTech has employee strength of less than ~400 employees
and is believed to have revenue of sub US$4mn. We expect deal to be valued
at less than 1.5x Sales.
 Valuation & Recommendation – Retain Accumulate with a TP of Rs1070: HCL
Tech is one of the largest Engineering Services vendors in India. The acquisition
will strengthen its capabilities, but see limited financial impact of the same.
Key financials (Y/e June) 2014 2015E 2016E 2017E
Revenues (Rs m) 329,180 370,672 411,404 464,186
Growth (%) 27.9 12.6 11.0 12.8
EBITDA (Rs m) 86,670 88,809 96,859 105,901
PAT (Rs m) 63,710 73,418 79,006 85,994
EPS (Rs) 45.9 52.9 57.0 62.0
Growth (%) 55.5 15.2 7.6 8.8
Net DPS (Rs) 9.2 15.1 19.2 19.2
Profitability & Valuation 2014 2015E 2016E 2017E
EBITDA margin (%) 26.3 24.0 23.5 22.8
RoE (%) 37.1 32.3 28.3 25.6
RoCE (%) 32.8 29.5 26.2 24.1
EV / sales (x) 4.0 3.5 3.1 2.6
EV / EBITDA (x) 15.3 14.7 13.1 11.6
PE (x) 20.9 18.1 16.9 15.5
P / BV (x) 6.6 5.3 4.4 3.6
Net dividend yield (%) 1.0 1.6 2.0 2.0
Source: Company Data; PL Research

2.
July 14, 2015 2
HCL Technologies
Some of the product offerings of the company
 Preferred Customer Technology: Utilizing facial recognition, it recognizes
customers as they walk by the key located devices. Upon recognition of a known
face, the technology identifies the customer and looks up preference data. All
information is stored in the cloud, eliminating the need for local storage and
allowing multiple locations to combine preferred customer information.
 WebSocket Support for Windows Embedded: WebSockets is a technique for
two‐way communication over one socket. With WebSockets, user can send and
receive data immediately, replacing the old HTML standard protocol of
document request and server response.
 TrygTech Inspect: TrygTech Inspect provides solution for capturing remote data
with a compact, mobile device. Numerous applications in fields such as: School
Safety Inspections, Fire Safety Inspections and Home Inspection.
Exhibit 1: Key employee profile
Name Designation Years Previous work Educational qualification
Tor Trygstad Principal 13 BSQUARE University of Washington
Julie Trygstad Owner 13 BSQUARE BSc, Computer Sc. ‐ Durham University
Source: PL Research, LinkedIn

3.
July 14, 2015 3
HCL Technologies
Income Statement (Rs m)
Y/e June 2014 2015E 2016E 2017E
Net Revenue 329,180 370,672 411,404 464,186
Raw Material Expenses 202,160 236,011 260,039 295,750
Gross Profit 127,020 134,661 151,365 168,437
Employee Cost — — — —
Other Expenses 40,350 45,852 54,506 62,536
EBITDA 86,670 88,809 96,859 105,901
Depr. & Amortization 7,320 4,467 4,959 5,536
Net Interest — — — —
Other Income (160) 9,200 8,800 9,236
Profit before Tax 79,190 93,543 100,700 109,601
Total Tax 15,480 20,125 21,694 23,607
Profit after Tax 63,710 73,418 79,006 85,994
Ex‐Od items / Min. Int. — — — —
Adj. PAT 63,710 73,418 79,006 85,994
Avg. Shares O/S (m) 1,386.6 1,386.6 1,386.6 1,386.6
EPS (Rs.) 45.9 52.9 57.0 62.0
Cash Flow Abstract (Rs m)
Y/e June 2014 2015E 2016E 2017E
C/F from Operations 65,063 58,690 80,060 86,468
C/F from Investing (50,400) (13,715) (15,222) (17,175)
C/F from Financing (11,885) (20,975) (26,569) (26,569)
Inc. / Dec. in Cash 2,778 24,000 38,269 42,725
Opening Cash 7,321 10,206 34,206 72,475
Closing Cash 10,206 34,206 72,475 115,200
FCFF 18,607 48,979 69,363 74,399
FCFE 19,157 48,979 69,363 74,399
Key Financial Metrics
Y/e June 2014 2015E 2016E 2017E
Growth
Revenue (%) 27.9 12.6 11.0 12.8
EBITDA (%) 48.5 2.5 9.1 9.3
PAT (%) 55.5 15.2 7.6 8.8
EPS (%) 55.5 15.2 7.6 8.8
Profitability
EBITDA Margin (%) 26.3 24.0 23.5 22.8
PAT Margin (%) 19.4 19.8 19.2 18.5
RoCE (%) 32.8 29.5 26.2 24.1
RoE (%) 37.1 32.3 28.3 25.6
Balance Sheet
Net Debt : Equity — (0.1) (0.2) (0.3)
Net Wrkng Cap. (days) — — — —
Valuation
PER (x) 20.9 18.1 16.9 15.5
P / B (x) 6.6 5.3 4.4 3.6
EV / EBITDA (x) 15.3 14.7 13.1 11.6
EV / Sales (x) 4.0 3.5 3.1 2.6
Earnings Quality
Eff. Tax Rate 19.5 21.5 21.5 21.5
Other Inc / PBT (0.2) 9.8 8.7 8.4
Eff. Depr. Rate (%) 23.3 10.8 9.6 8.7
FCFE / PAT 30.1 66.7 87.8 86.5
Source: Company Data, PL Research.
Balance Sheet Abstract (Rs m)
Y/e June 2014 2015E 2016E 2017E
Shareholder's Funds 200,780 253,222 305,660 365,085
Total Debt 7,510 7,510 7,510 7,510
Other Liabilities 14,600 14,596 14,596 14,596
Total Liabilities 222,890 275,328 327,766 387,191
Net Fixed Assets 31,470 41,182 51,878 63,947
Goodwill 51,490 51,027 50,593 50,163
Investments 120 120 120 120
Net Current Assets 116,350 159,540 201,715 249,501
Cash & Equivalents 10,210 34,206 72,475 115,200
Other Current Assets 188,110 212,670 226,173 243,671
Current Liabilities 81,970 87,336 96,934 109,370
Other Assets 23,460 23,460 23,460 23,460
Total Assets 222,890 275,328 327,766 387,191
Quarterly Financials (Rs m)
Y/e June Q1FY15 Q2FY15 Q3FY15 Q4FY15E
Net Revenue 87,350 92,830 92,670 97,822
EBITDA 21,920 23,190 20,910 22,789
% of revenue 25.1 25.0 22.6 23.3
Depr. & Amortization 920 970 1,020 1,093
Net Interest — — — —
Other Income 3,050 2,160 1,790 1,640
Profit before Tax 23,930 24,260 21,570 23,223
Total Tax 5,190 5,100 4,730 5,105
Profit after Tax 18,740 19,160 16,838 18,118
Adj. PAT 18,740 19,160 16,838 18,118
Key Operating Metrics
Y/e June 2014 2015E 2016E 2017E
Volume (persons months) 562,716 614,486 695,291 785,679
Pricing (US$ / Hr) 37.1 36.4 37.5 38.0
Currency (INR/USD) 61.4 62.2 61.5 60.5
SW. Devp. Cost (% of sales) 61.4 63.7 63.2 63.7
SG&A (% of sales) 12.3 12.4 13.2 13.5
Revenue (US$ m) 5,360 5,958 6,690 7,673
EBITDA Margin Expansion/(Erosion) (bps) 365 (237) (42) (73)
Tax Rate (%) 19.5 21.5 21.5 21.5
Source: Company Data, PL Research.

4.
July 14, 2015 4
HCL Technologies
Prabhudas Lilladher Pvt. Ltd.
3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai‐400 018, India
Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
Rating Distribution of Research Coverage PL’s Recommendation Nomenclature
42.3% 40.2%
17.5%
0.0%
0%
10%
20%
30%
40%
50%
BUY Accumulate Reduce Sell
% of Total Coverage
BUY : Over 15% Outperformance to Sensex over 12‐months
Accumulate : Outperformance to Sensex over 12‐months
Reduce : Underperformance to Sensex over 12‐months
Sell : Over 15% underperformance to Sensex over 12‐months
Trading Buy : Over 10% absolute upside in 1‐month
Trading Sell : Over 10% absolute decline in 1‐month
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly
DISCLAIMER/DISCLOSURES
ANALYST CERTIFICATION
We/I, Mr. Shashi Bhusan (BTech (IIT), MBA (IIM)), Mr. Hussain Kagzi (BMS), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this
report.
Terms & conditions and other disclosures:
Prabhudas Lilladher Pvt. Ltd, Mumbai, India (hereinafter referred to as “PL”) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for third party financial products. PL is a
subsidiary of Prabhudas Lilladher Advisory Services Pvt Ltd. which has its various subsidiaries engaged in business of commodity broking, investment banking, financial services (margin funding) and distribution of third
party financial/other products, details in respect of which are available at www.plindia.com
This document has been prepared by the Research Division of PL and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to
others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security.
The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness of the same. Neither PL nor any of its
affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.
Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend
upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor.
Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies
referred to in this report and they may have used the research material prior to publication.
PL may from time to time solicit or perform investment banking or other services for any company mentioned in this document.
PL is in the process of applying for certificate of registration as Research Analyst under Securities and Exchange Board of India (Research Analysts) Regulations, 2014
PL submits that no material disciplinary action has been taken on us by any Regulatory Authority impacting Equity Research Analysis activities.
PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company.
PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month immediately preceding the date of
publication of the research report.
PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report.
PL or its associates might have received compensation from the subject company in the past twelve months.
PL or its associates might have managed or co‐managed public offering of securities for the subject company in the past twelve months or mandated by the subject company for any other assignment in the past twelve
months.
PL or its associates might have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
PL or its associates might 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 twelve months
PL or its associates might have received any compensation or other benefits from the subject company or third party in connection with the research report.
PL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. PL or its analysts did not receive any compensation or other benefits from the subject
Company or third party in connection with the preparation of the research report. PL or its Research Analysts do not have any material conflict of interest at the time of publication of this report.
It is confirmed that Mr. Shashi Bhusan (BTech (IIT), MBA (IIM)), Mr. Hussain Kagzi (BMS), Research Analysts of this report have not received any compensation from the companies mentioned in the report in the
preceding twelve months
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
The Research analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his
or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
The research analysts for this report has not served as an officer, director or employee of the subject company PL or its research analysts have not engaged in market making activity for the subject company
Our sales people, 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 o
the foregoing, among other things, may give rise to real or potential conflicts of interest.
PL and its associates, their directors and employees may (a) from time to time, have a long or short position in, and buy or sell the securities of the subject company or (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 subject company or act as an advisor or lender/borrower to the subject company or may have any
other potential conflict of interests with respect to any recommendation and other related information and opinions.
DISCLAIMER/DISCLOSURES (FOR US CLIENTS)
ANALYST CERTIFICATION
The research analysts, with respect to each issuer and its securities covered by them in this research report, certify that: All of the views expressed in this research report accurately reflect his or her or their personal
views about all of the issuers and their securities; and No part of his or her or their compensation was, is or will be directly related to the specific recommendation or views expressed in this research report
Terms & conditions and other disclosures:
This research report is a product of Prabhudas Lilladher Pvt. Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are
resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker‐dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker‐dealer, and is/are not required to
satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and
trading securities held by a research analyst account.
This report is intended for distribution by Prabhudas Lilladher Pvt. Ltd. only to "Major Institutional Investors" as defined by Rule 15a‐6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and
interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon
this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a‐6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Prabhudas
Lilladher Pvt. Ltd. has entered into an agreement with a U.S. registered broker‐dealer, Marco Polo Securities Inc. ("Marco Polo").
Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.