Views on HCL Technologies Ltd 3QFY2017 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on HCL Technologies Ltd 3QFY2017 Results:

"HCL Tech posted numbers more or less in line with expectations. On the revenue front, the company posted a 1.3% sequential growth in USD revenues to US$1,745mn V/s US$1,749mn expectations V/s US$1,722mn in 2QFY2017. Revenue in Constant Currency (CC) was up 3.0% QoQ. In rupee terms, revenues came in at INR 11,814cr V/s INR 11,797cr expected V/s INR 11,519cr in 2QFY2017, up 2.6% QoQ. In terms, of geography, Europe posted a 6.8% QoQ CC growth and US was up by 1.7% QoQ CC and ROW dipped 0.5% QoQ. Financial Services posted a 4.5% QoQ CC growth, Manufacturing posted a 8.3% QoQ CC growth, Public services posted a 5.6% QoQ CC growth. The Industry which posted a dip was Life Sciences & Healthcare 2.9% QoQ, Retail & CPG posted a dip of 6.9% QoQ CC, while Telecom, Media & Publishing & Entertainment dipped by 3.3% QoQ CC.

On EBIT front, the company posted an EBIT of 20.4% V/s 20.0% expected and V/s 20.1% in 2QFY2017, expansion of 30bps QoQ. Consequently, PAT, came in at INR 2,070cr (in line with expectations) V/s INR 2,014cr in 2QFY2017, a growth of 2.8% QoQ. On operating front, strong client addition continued-$US5+mn clients up by 14, $US10+ mn clients up by 8, $US20+ mn clients up by 13, $US40+ mn, clients up by 9, $US50+ mn clients up by 5 and $US100+ mn clients up by 1. HCL has extended its IP partnership with IBM to define the future roadmaps for additional products in the areas of Application security, B2B data transformation, Testing automation and Mainframe management tools. HCL has committed to invest ~$US155mn in the extended partnership.

On guidance front the company guided for FY'2017 Revenues to grow between12.0-14.0% using the average exchange rates for FY'2016. This translates to 10-12% in US$ terms based on December 31, 2016 exchange rates. We expect our FY'2017 revenues to be in the middle of this range. The acquisitions and IP led partnerships announced after 30 September, 2016 are likely to additionally contribute 0.6% to 1.0% in revenues depending upon the date of consummation of Geometric deal. FY'2017 expected Operating Margin (EBIT) continues to be in the range of 19.5-20.5% post consummation of acquisitions. We maintain our BUY rating on the stock, with a price target of INR 1,000."

Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.841.8 as compared to the previous close of Rs. 849.2. The total number of shares traded during the day was 64030 in over 2520 trades.

The stock hit an intraday high of Rs. 856.35 and intraday low of 837.8. The net turnover during the day was Rs. 54264744.

Source : Equity Bulls

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