Earnings Update - HCL Technologies(HCLT IN) - Industry leading growth ahead - CSEC Research

Industry leading growth ahead

- In 4QFY17, HCL Technologies reported 3.8% QoQ growth in Constant Currency, higher than previous quarter (+3.0% QoQ in CC terms). In dollar terms, revenue stood at USD 1,817mn; a growth of 4.1% QoQ. In rupee terms, Revenue came in at INR 120.5bn (+2.0% QoQ). Revenue growth was primarily driven by acquisitions of Butler (full quarter consolidation), Geometric (one month consolidation) & IP partnerships. Adjusting for the acquisitions, organic growth was at 1.3% QoQ.

- EBIT margins fell 40 bps QoQ to 20.0% on account of currency headwind (50 bps QoQ), higher SG&A expense & acquisition integration cost which was partly offset by operational efficiency. Reiterating FY17 margin guidance, the management expects margins in the range of 19.5%-20.5% in FY18E.

Valuation: At CMP, the stock trades at P/E of 13.7x/12.5x on FY18E/FY19E EPS. We maintain a BUY rating on the stock with target price of INR 1,018 assigning a P/E of 15.0X on FY19E based on consensus estimates.

Risks: Visa uncertainty, lower discretionary spending, pricing pressure and currency headwinds are key risks.

Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.845.95 as compared to the previous close of Rs. 848.3. The total number of shares traded during the day was 187832 in over 4521 trades.

The stock hit an intraday high of Rs. 856.9 and intraday low of 844.2. The net turnover during the day was Rs. 159234950.

Source : Equity Bulls

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