HCL Tech may post 1.8% topline growth in Q4: Way2Wealth

Decision Delay Expected To Push Revenue Growth Down: HCL Technologies’ topline in Q4FY12 is expected to register 1.81% sequential growth to reach $1067mn. Software services segment is expected to grow by 1.71% sequentially and Infrastructure services segment is expected to register sequential growth of 3.00% mainly backed by ramp up of past won deals. We believe, BPO segment would register flat performance QoQ.

No Pressure on Margin Expected: The company is not expected to face any margin pressure in Q4FY12 as the wage hike is scheduled to happen in next quarter. Moreover, any pressure from incremental visa cost and onsite hiring would be taken care off by INR depreciation. Moreover, better performance in the BPO business would also help margin to remain high.

Strong Order Book Would Help To Grow Faster: HCL Has $2.5bn of order-book position and ramp up of those earlier won deals would help the company to register better performance as compared to the other big peers. The company also has $1bn of deal wins in the BFSI sector and they are not experiencing much pressure of IMS spending by the global banks. Although, there are some pressure on the IT spending by the banks in USA, but, HCL has only 25% exposure to US banking space and hence not experiencing much of pressure.

Aggressive Client Focused Strategies Yielded Results: HCL announced very strong deal wins during the quarter mainly in total IT outsourcing and BPO space. The company’s immense focus on the combined Application and Infrastructure deals yielded results. During forth quarter, HCL won IMS contract from Norway-based Statoil and combined IT outsourcing contract from US insurance group GAIG. Some of the other important deals are; five-year IT infrastructure outsourcing deal worth $300 million with Finland based UPM, and multi-year outsourcing contract with UBS.

Focused Geographical Expansion To Target Growth: During the quarter, the company has also concentrated to expand its presence in the growing economies and reduce exposure from the shrinking geographies. Recently HCL closed down their call centre in the Northern Ireland. But, at the same time the company opened new BPO facility in Philippines which will initially employ 1,000 people.

FIIs holding more than 30% in Indian cos

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