Views on HCL Technologies Ltd 4QFY2017 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking):

HCL Tech (CMP: INR 842 / TP: INR 1,000 / Upside: 18.8%)

"The company, posted 4QFY2017 results better than expected. In US$ the revenues came in at US$1,817mn V/s US$1,810mn expected V/s US$1,745mn in 3QFY2017, a QoQ growth of 4.1%. In rupee terms, the revenue is expected to grow by 2.0% QoQ to INR 12,053cr V/s INR 12,064cr expected V/s INR 11,814cr in 3QFY2017. On constant Currency (CC) basis, company posted a 3.8% QoQ growth. On the growth front; USA posted a CC QoQ growth of 5.3%, Europe posted a dip of 3.0% CC and ROW posted a CC QoQ growth of 15.8%. In terms, of verticals the Financial services posted a CC QoQ growth of 3.0%, Manufacturing posted a CC QoQ growth of 6.3%, Life sciences & Healthcare posted a CC QoQ growth of 0.1%, Public Services posted a CC QoQ growth of 8.1%, while Retail & CPG posted a CC QoQ growth of 2.1%. The vertical which posted a dip was Telecommunication, Media, and Publishing & Entertainment which came in at 2.1%.

On the operating front, EBITDA margin came in at 22.0% V/s 21.9% expected V/s 22.2% in 3QFY2017, a dip of 20ps QoQ, while the EBIT, came in at 20.0% V/s 20.1% expected V/s 20.4% in 3QFY2017, 40bps QoQ dip. Thus, PAT came in at INR 2,325cr V/s INR 1,982cr expected V/s INR 2,070cr in 3QFY2017, down 12.3% QoQ. Strong client addition: $5+ mn clients up by 13, $10+ mn clients up by 9, $20+ mn clients up by 10, $40+ mn clients up by 5, and $50+ mn clients up by 6.

For FY'2018 revenues are expected to grow between 10.5% to 12.5% in Constant Currency (CC). Revenue Guidance is based on FY'17 (April to March) average exchange rates. The above constant currency guidance translates to 9.9% to 11.9% in US$ terms based on March 31, 2017 rates. On the operating Margin (EBIT), with FY'2018 is expected to come in the range is from 19.5% to 20.5%. Given the valuations, we maintain our BUY rating with a target price of INR 1,000."

Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.838.65 as compared to the previous close of Rs. 842.3. The total number of shares traded during the day was 252820 in over 4567 trades.

The stock hit an intraday high of Rs. 858.2 and intraday low of 835.4. The net turnover during the day was Rs. 213413664.

Source : Equity Bulls

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