P-Sec is bullish on HCL Tech and has maintained a buy rating on the stock and expects a target price of Rs 360.
P-Sec research report on HCL Technologies
The topline of Rs 16120 million (2.2% q-o-q, 28.6% y-o-y) for the quarter has been inline with our estimates, factoring in for the rising rupee. The notional profit arising out of mark to market of forward cover (net of translation losses) has resulted into strong PAT of Rs 4877 million (109.5% y-o-y, 47.2% q-o-q).The operating margins have declined by 170 bps, an obvious impact of sharp rupee appreciation. We believe the management has done a commendable job in margin erosion containment. Our primary concern for HCL Tech, lumpiness, has been largely addressed by the management with the last four quarter volume growth being above 9.5%. The stock is trading within at 14.1x FY07 and 13.4x FY 08P EPS and is with in our price target of Rs 360. We reiterate BUY.
