HCL Technologies - 2QFY2018 Result Update - Angel Broking

HCL Tech announced slightly lower than expected sales for 2QFY2018. On sales front the company posted 2.3% sequential growth in USD revenues to US$1,928mn v/s. US$1,944mn expected. In Constant currency terms (CC), the company posted a 0.9% qoq growth. In Rupee terms, revenues came in at Rs. 12,434cr v/s. Rs. 12,558cr expected, up 2.3% qoq. EBIT margin came in at 19.7% v/s 18.7% expected. Consequently, PAT came in at Rs. 2,188cr v/s. Rs. 2,171cr expected, a rise of 0.8% qoq. FY2018 revenue guidance has been kept in the range of 10.5-12.5% in constant currency, while operating margin are expected to be in the range of 19.5-20.5%. We maintain our Buy.

Quarterly highlights: On sales front the company posted 2.3% sequential growth in USD revenues to US$1,928mn v/s. US$1,944mn expected. In Constant Currency terms the company posted a 0.9% qoq growth. In Rupee terms, revenues came in at Rs. 12,434cr v/s. Rs. 12,558cr, up 2.3% qoq growth. In terms of the Industries, in CC terms, FSI posted qoq growth of 1.2%, MFG grew by 2.4% qoq, RCL de-grew by 0.5% qoq, Public Services de-grew by 4.6% qoq, Life Sciences and Health grew by 1.8% qoq and Telecommunications, Media, Publishing & Entertainment grew by 1.7% qoq. In terms of geography, in CC terms, USA grew by 1.5% qoq, Europe grew by 4.4% qoq, and ROW de-grew by 12.0% qoq. EBIT margin came in at 19.7% v/s. 18.7% expected. Consequently, PAT came in at Rs. 2,188cr v/s. Rs. 2,171cr expected, a rise of 0.8% qoq.

Outlook and valuation: We expect HCL Tech to post a USD and INR revenue CAGR of 9.7% and 8.2% respectively over FY2017-19E. On the back of strong order book and given the attractive valuations, we recommend a Buy on the stock.

Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.855.55 as compared to the previous close of Rs. 835.9. The total number of shares traded during the day was 107652 in over 2229 trades.

The stock hit an intraday high of Rs. 860.75 and intraday low of 837.15. The net turnover during the day was Rs. 91740055.

Source : Equity Bulls

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