HCL Technologies - Good quarter - ICICIdirect

HCL Tech reported Q1FY14 dollar revenues of $1,270 million (3.5% QoQ growth), in-line with our estimate ($1,274 million) while constant currency revenues grew 3.6% QoQ. Growth was led by IMS (8.8%) while core software saw modest demand uptick (1.1% QoQ vs. 0.3% in Q4FY13). Rupee revenues came in at Rs. 7,961 crore (14% growth QoQ) ahead of our Rs. 7,910 crore estimate led by higher rupee realisation (Rs. 62.7 vs. 62.08 assumed). EBIT margins improved 310 bps QoQ to 23.8% and were ahead of our 156 bps increase and 22.6% estimate. HCLT signed nine transformational deals and deals in-excess of $1 billion during the quarter.

IMS leads while core software sees demand uptick

RoW, Europe and Americas grew 8.5%, 1.0% and 4.0% QoQ in constant currency, respectively. Among services, infrastructure (8.8%) continues to lead followed by BPO (1.7%) and ER&D (1.5%). Core software saw demand uptick due to recovery in enterprise application services (1% vs. - 3.2% in Q1). Financial services & manufacturing grew 6.9% and 5.4%, respectively, helped nicely by life-sciences & healthcare (6.5%) and public services (3.1%). Top 5, 10 and 20 accounts grew 1.8%, 3.7% and 4.1% QoQ, respectively. Net additions for the quarter were 1,691. IT services attrition rose 120 bps QoQ to 16.1% while for BPO it declined 40 bps to 6.5%. Blended utilisation increased 40 bps QoQ to 84.9%. We would revisit our estimates and come out with a detailed report shortly.

Source : Equity Bulls

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