HCL Technologies - Q3FY13 Result Review - Angel Broking

For 3QFY2013, HCL Technologies (HCL Tech) reported yet another set of healthy results, beating our as well as market expectations on all fronts. The USD revenue came in at US$1,191mn, up 3.2% qoq, on the back of a whopping 9.0% qoq USD revenue growth in constant currency (CC) terms in its infrastructure services business and 0.4% qoq volume growth in its core software services business. In INR terms, revenue came in at Rs. 6,425cr, up 2.4% qoq. Operating margin of this company has always been a concern and now management's focus to improve this has been paying off. The company has been able to increase its operating margins since last four quarters. During 3QFY2013, HCL Tech's EBITDA margin declined by 18bp qoq to 22.4% while EBIT margin remained almost flat qoq at 19.9%. PAT stood tall at Rs. 1,040cr, up 8% qoq, aided by forex gain of Rs. 23cr vs. forex loss of Rs. 13cr in 2QFY2013.

HCL Tech won over US$1bn multi-year, multi-million dollar deals this quarter, maintaining its sustained momentum of signing ~US$1bn+ TCV worth of deals every quarter. HCL Tech has displayed an industry-leading growth trajectory and has a strong position in one of the fastest growing service vertical of IMS. Strong set of results from HCL Tech shrug off any concerns regarding health of Indian IT industry which were raised because of weak performance by Infosys. The management sounded confident of sustaining revenue growth within the top-tier league.

We continue to be positive on the stock while the target price is currently under review.

Source : Equity Bulls

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