HCL Technologies - Result Review - Angel Broking

HCL Tech reported inline set for results for 4QFY2013 on revenue and operational margin front with overall bottomline ahead of expectations on the back of higher than expected forex gains and lower tax rate. The dollar revenues grew by 3.1% qoq to US$1227.6mn, led by strong 8.6% qoq dollar revenue growth in Infrastructure management services. Software services saw the lowest growth among the segments with about 0.6% qoq growth in revenues to US$788mn. HCL Tech, with end-to-end IT capabilities and a strong client mining ability, is outperforming many of its peers companies. 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 five quarters and this quarter EBIT margin of the company grew by 118bp qoq to 21.0%. PAT stood tall at Rs. 1,209cr, up 16% qoq, aided by forex gain of Rs. 31cr and lower tax rate of 22% as against 24.2% in 3QFY2013.

HCL Tech won 12 multi-year, multi-million dollar deals this quarter with worth over US$1bn, 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. The only concern that remains with the company is soft growth in core software services since last three quarters and we wait for management commentary on this. Overall, we continue to be positive on the stock keeping in notice the company's deal signing trajectory and healthy performance since last several quarters. The target price is currently under review.

Source : Equity Bulls

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