Sumit Bilgaiyan
HCL Technologies has reported a weak quarter. Its revenues grew 2.5 percent QoQ to USD 2.04 billion. Growth in cc was 1.2 percent. Organic revenue growth in cc basis was 50bps after assuming incremental contribution of USD 15 million from new IP deals.
HCL Tech does not share inorganic contribution to revenues. EBIT margin of 19.6 percent was aided by contribution from IP deals that are margin accretive.
Net profit is up by 1.5 percent YoY which is aided by forex gain of Rs 1.61 billion. Organic growth slows down further to low single digits in
4QFY18. Application Services grew at 1.6 percent YoY, IMS at 2.9 percent and BPO at 6 percent after consolidation of an acquisition.
Engineering and R&D Services grew 30 percent YoY but largely on the back of IBM IP deals and Geometric & Butler acquisitions. The company has guided for 9.5-11.5 percent cc revenue growth for FY19. This translates into weak organic cc growth of 4.25-6.25 percent. We believe that slowdown is across the board and it’s better to be cautious considering a sharp rally we have seen in HCLTech’s counter. We have lowered down our targets to Rs 975.
Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
