Edelweiss' research report on HCL Tech
HCL Technologies’ (HCLT) Q3FY17 numbers— 3.0% QoQ CC revenue growth (1.3% USD) and 20.4% EBIT margin—surpassed estimates. Management guided for 13% CC revenue growth (ex-acquisitions) and maintained 19.5-20.5% EBIT margin estimate for FY17. The company expects flat-to-slightly-positive budgets for CY17 based on initial discussions with clients and anticipates its higher local talent in the US market (55%) to shield it from any significant impact of tougher visa norms.
Outlook
We maintain that HCLT is well positioned to benefit from the USD50-60bn p.a. rebid market over the next 3 years, favourable portfolio with 58% business from high-growth IMS & ER&D and robust traction in transformation deal wins. Maintain ‘BUY’ with INR 1,058 target price.
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