HCL Technologies - Q2FY14 Result Review - Angel Broking

For 1QFY2014, HCL Tech marginally disappointed on the revenue front but exceeded expectations considerably on the operational performance as well as on the overall bottomline front. The dollar revenues grew by 3.5% qoq to US$1,270mn, led by strong 8.8% qoq dollar revenue growth in Infrastructure management services (IMS). Excluding IMS, revenue growth was subdued at 1% qoq. In INR terms, revenue came in at Rs. 7,961, up 14% qoq. EBIT margin of HCL Tech grew substantially by ~310bp qoq to 23.8% despite giving wage hikes during the quarter, which is a commendable task. Historically, operating margin has been a concern for HCL Tech but the company has shrug off all the concerns by consistently posting increase in operating margins since last six quarters. PAT stood tall at Rs. 1,416cr, up 19% qoq, aided by strong operating gains.

HCL Tech won 9 transformational deals during the quarter and booked US$1bn+ TCV worth of deals, maintaining its sustained momentum of signing ~US$1bn TCV worth of deals every quarter. HCL Tech has a strong position in one of the fastest growing service vertical of IMS and on the back of this the company has been growing largely at par with its peers. The concern that remains with the company is soft growth in core software services for four quarters in a row and we would remain watchful for this. Overall, the company performed exceptionally well on the margins front. The stock is currently under review.

Source : Equity Bulls

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