HCL Technologies - Q2FY21 First Cut - ICICI Securities

(CMP: Rs. 826, MCap: Rs. 224,067 crore)

HCL Tech reported a healthy set of Q2FY21 numbers and has revised its margin guidance upwards from 19.5%-20.5% to 20.0%-21.0%. The company' revenue was above our estimate 4.5% QoQ in cc terms vs our expectation of 3.5% QoQ growth, while margins were broadly in line with our estimates. Vertical wise Technology & services (up 6.3% QoQ), Retail (up 8.4% QoQ) life science (up 8.6% QoQ), BFSI (up 2.6% QoQ) and Telecommunication (up 6.1% QoQ) drove company's topline. Geography wise Americas and Rest of the World (ROW) increased 4.9% QoQ & 9.0% QoQ, respectively.

Q2FY21 Earnings Summary

- Revenues in constant currency grew by 4.5% QoQ. US$ revenues increased by 6.4% QoQ to $2,507 million (above our estimate of 4.8% growth). Revenues in rupees has risen by 4.2% QoQ to Rs. 18,594 crore (vs. our estimate of 18,361 crore)

- EBIT margins expanded 108 bps QoQ to 21.6% (vs our 21.3% estimate) led by ~140 bps QoQ expansion in gross margins

- PAT of Rs. 3,142 crore (vs our estimate Rs. 3,151 crore) increased 7.5% QoQ mainly led by improvement in operating margin

- HCL Tech has maintained revenues guidance of 1.5-2.5%QoQ growth over next two quarters. However, the company has revised its margin guidance upwards from 19.5-20.5% to 20.0-21.0%

The company has reported healthy revenue growth and margins. The company's upward revision of margin guidance also bodes well. We would be revisiting our estimates and target price post the conference call.

Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.827.1 as compared to the previous close of Rs. 859.45. The total number of shares traded during the day was 723337 in over 21298 trades.

The stock hit an intraday high of Rs. 877 and intraday low of 821. The net turnover during the day was Rs. 604908554.

Source : Equity Bulls

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