Prabhudas Lilladher's report on HCL Technologies
"HCL Technologies (HCLT) reported a miss to PLe/Consensus’ expectation. Revenue momentum continues to decelerate along with downward slide in operating margin despite multiple tailwinds. We believe increased competition in IMS (peers & cloud), pressure on margin (investment and pricing), and mean reversion in FCF conversion, would weigh down on stock price in near term."
"HCLT’s deal closure for FY15 has been $5bn, in-line with their quarterly run-rate of $1.25bn (press release: $1bn+). Management expects deal closure to be higher as deal pipeline is stronger than previous year. However, we don’t expect acceleration in deal closure due to strong competitive landscape. Moreover, annual deal closure has stayed stable at ~$5bn since FY12. HCLT will grow in-line with industry with continued pressure on margin would suppress earnings momentum. We retain our “Accumulate” rating on the stock with a target price of Rs 1020", says Prabhudas Lilladher research report.
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