Views on HCL Technologies Ltd 3QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on HCL Technologies Ltd 3QFY2016 Results:

HCL Technologies Ltd (CMP: INR 838 / TP: INR 1,038 / Upside: 23.9%)

"HCL Tech for its 3QFY2016 posted numbers lower than expected on top line, while the bottom-line came in at lower than expected. For 3QFY2016, the company posted a 1.3% QoQ growth to end the period at US$1,587mn V/s US$1,607mn expected. In rupee terms, the company posted sales of INR 10,698cr V/s INR 10,850cr expected, a QoQ growth of 3.4%. On constant currency terms (CC), the growth was 1.7% QoQ.

In terms, of geography, on CC terms, the company posted 3.7%, -2.4% and 1.3% QoQ growth in USA, Europe and ROW respectively. In terms of Services, the company posted 0.5%, 3.9%, 1.9% and -4.1% in QoQ CC growth in Application Services, Infrastructure Services, Engineering and R&D Services and business services respectively. In terms of verticals, the company posted a QoQ CC growth of -1.3%, 0.9%, 6.4%, 7.1%, -1.2%, 4.2% in Financial Services, Manufacturing, Life sciences & Healthcare, Public Services, Retail & CPG and Telecommunications, Media, Publishing & Entertainment respectively.

On the operating front, the EBIT came in at 20.7% in line with expectations. Hence, the net profit came in at INR 1,926cr V/s INR 1,936cr expected a QoQ growth of 0.3%. On the operational front, the utilization levels moved up to 85.6% V/s 84.7% in 2QFY2016, while the attrition rate for IT services came in at 17.3% V/s 16.7% in 2QFY2016. HCL Tech signed 7 transformational deals this quarter with TCV of more than US$2bn, taking the number of transformational engagements during the nine month financial year to 25, with TCV of more than US$ 4bn. These wins were broad-based across service lines and industry verticals, led by next-generation offerings - BEYONDigital, IoT WoRKS and Next-Gen ITO. We maintain our BUY rating with a price target of INR 1038."

Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.750.45 as compared to the previous close of Rs. 799.95. The total number of shares traded during the day was 854054 in over 19739 trades.

The stock hit an intraday high of Rs. 795 and intraday low of 748.2. The net turnover during the day was Rs. 648812785.

Source : Equity Bulls

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