HCL Technologies - Q4 FY2012 and FY2012 FirstCut - Microsec Research

HCL Technologies Ltd (HCL) posted its consolidated Q4 FY2012 and FY2012 numbers on 25 July 2012. A glimpse of the same is as follows:

HCL's top line increased 13.5% q-o-q to Rs.5,919.1 Crores whereas its bottom line jumped 41.8% sequentially to Rs.854.1 Crores in Q4 FY2012. The growth in revenues can be attributed to an impressive 3.0% expansion in $ terms sales and depreciation of home currency against the greenback. Furthermore, the depreciation of Rs. enabled HCL to post significant enhancement in its operating and net profit margins. As expected, the company's top line performance came in line with its larger peer TCS. However, HCL outperformed Infosys and Wipro by a wide margin.

Although HCL posted healthy performance for quarter and year ending June 2012, its margins still remains significantly lower than its larger peers. Furthermore, at Rs.508, the company currently trades at a PE multiple of 14.5x, which in our view is reasonable for the stock considering its margins profile. With this, we suggest a hold on the stock at current juncture.

Source : Equity Bulls

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