Prabhudas Lilladher's research report on HCL Technologies
HCL Tech’s results were below our estimates on topline but were above ours estimates on PAT. Revenues at USD2055mn were up 0.8% QoQ and below our estimates (Ple: USD2070mn). Constant Currency growth for the quarter stood at 2.7% QoQ which is marginally below our estimates (Ple: 3%). Organic cc growth for the quarter was 0.8% QoQ and rest on account of C3i acquisition (~1.9%). HCL Tech’s organic cc growth in 1QFY19 is below peers (TCS/Infosys delivered 4.1/2.3% organic cc growth). Management cited that softness in ROW region (down 7% QoQ) led by continued pruning in System Integration business in India (USD12mn drop in 1Q) also led to the tepid revenue performance. Among verticals, BFSI (down 1.4% in cc), Manufacturing (down 1.3% in cc), Retail &CPG (down 1.6% in cc) remained weak. Softness in all the core verticals was a turn off. EBIT margin came at 19.7% up 10bps QoQ and above our estimates (Pl ests: 19.4%). PAT at Rs24bn is 5% above our estimates (Ple: Rs22.8bn) led by margin beat.
Outlook
Retain BUY with TP retained at Rs1100/sh (14.5x FY20E EPS). Scope for uptick in organic growth from 2HFY19 is the key trigger.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their 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!
Read More
