Accumulate HCL Tech; target of Rs 496: Dolat Capital

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Accumulate HCL Tech; target of Rs 496: Dolat Capital

Dolat Capital is bullish on HCL Tech and has recommended accumulate rating on the stock with a target of Rs 496 in its January 17, 2012 research report.

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RELATED NEWS Hold South Indian Bank; target of Rs 25: Emkay Buy TTK Healthcare; target of Rs 463: Firstcall Research Buy HCL Tech; target of Rs 470: PINC Research ALSO READ See previous views by Dolat Capital See what other Experts & Brokerages are saying about HCL Tech See messages about HCL Tech HCL Tech BSE | NSE 30/05/12 Are Mutual Funds betting on HCL Tech?

Dolat Capital is bullish on HCL Tech and has recommended accumulate rating on the stock with a target of Rs 496 in its January 17, 2012 research report.

"HCL Tech declared its results for Q2 FY12 with revenue of Rs 52.5bn, up 12.8% sequentially- marginally above our estimations of Rs 51.7 mn. Revenue in constant currency grew 3.7%, led by sustained volume traction (up 5%) and a marginal improvement in the pricing. Amongst the key verticals, Financial services has shown a growth of 2.8% where company has benefited from the vendor consolidation whereas the energy and utilities service has de grew 18% qoq due weakness in the domestic projects. The company added 66 new relationships during the quarter with an increase in the USD 100+ mn clients by two in number which is a result of cross/up selling Opportunities. EBIT has improved by 25% QoQ with an OPM improvement by 156 bps at 15.8 % whish is a result of +260 bps from the currency realizations and -104 bps from annual bonuses and investment in SGA. Company is planning to spend the currency gains partly towards the investment areas for higher value deals."

"The company has been delivering strong revenue growth compared to peers over the past eight quarters, but has lagged on profitability growth. This has resulted in widened valuation discounting (34% discount to tier I vendors). We maintain our Accumulate rating on the stock with a target price of Rs 496, valued at 13x of its FY13E earnings," says Dolat Capital research report.

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