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SMR
08-13-2015, 07:08 AM
HCL Technologies Limited (HCL) is a global technology company. The Company operates in three segments: Software services, Information Technology (IT) Infrastructure services and Business Process Outsourcing services. The Company’s services line include, Business Services, Custom Application Services, Engineering and Research and Development (R&D) Services, Enterprise Application Services, Enterprise Transformation Services, IT Infrastructure Management Services and Outsourcing. The Company delivers solutions across a range of verticals, such as automotive, banking, chemical, energy (oil and gas) and utility, consumer electronics, financial services, consumer product goods, hi-tech, independent software vendor (ISV), insurance, life sciences, healthcare and pharmaceuticals, manufacturing, media, publishing and entertainment, retail, telecom, travel and tourism and logistics.

Official Website: www.hcltech.com

SMR
08-13-2015, 07:09 AM
For 4QFY2015, HCL Technologies (HCL Tech) posted better-than-expected results on the top-line front, the OPM came in below expectations, and the net profit came in just in line with our expectations. The company posted a growth of 3.2% qoq in USD revenues to US$1,538mn in 4QFY2015 V/s US$1,535mn expected and V/s US$1,491mn in 3QFY2015. In Constant Currency (CC) terms, the company posted a 2.9% qoq revenue growth for 4QFY2015. On the operating front the EBDITA margin came in at 21.5% V/s 22.8% expected and V/s 22.6% in 3QFY2015, a qoq dip of 108bp. The PAT came in at Rs1,783cr V/s Rs1,782cr expected and V/s Rs1,683cr in 3QFY2015, ie a qoq growth of 5.9%. The PAT came in in line with our expectation in spite of the EBDITA contraction, on back of higher-than-expected other income. Other income came in at Rs212cr in 4QFY2015 V/s Rs179cr in 3QFY2015. We maintain our Buy rating on the stock with a target price of Rs1,132. Quarterly highlights: HCL Tech posted a growth of 3.2% qoq in USD revenues to US$1,538mn in 4QFY2015 V/s US$1,535mn expected and V/s US$1,491mn in 3QFY2015. In Constant Currency (CC) terms, the company posted a 2.9% qoq revenue growth for 4QFY2015. In terms of geography, the US (58.6% of sales) posted a robust CC growth of 5.1% qoq, Europe (30.4% of sales) posted a CC growth of 0.1% qoq, while ROW (11.0% of sales) posted a 0.1% qoq CC dip in revenue. On the operating front, the EBDITA margin came in at 21.5% V/s 22.8% expected and V/s 22.6% in 3QFY2015, ie a qoq dip of 108bp. The margin came under pressure owing to wage hikes during the quarter. The PAT came in at Rs1,783cr V/s Rs1,782cr expected and V/s Rs1,683cr in 3QFY2015, a qoq growth of 5.9%. Outlook and valuation: We expect HCL Tech to post a USD and INR revenue CAGR of 13.0% and 13.2%, respectively, over FY2015–17E. On the operating front, we remain skeptic on the company’s ability to sustain operating margins at current levels. On back of valuations, we recommend a Buy on the stock.

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