January 25, 2017 / 15:41 IST
HCL Technologies reported USD revenue growth of 1.3%QoQ (CC growth of 3%QoQ) to USD 1.74bn largely in line with our estimates, supported by strong growth in engineering services. INR revenue grew 2.5%QoQ to Rs 118.1bn (DCMe: Rs 118.3bn) helped by rupee depreciation. EBIT margin grew 26bps QoQ to 20.1% (DCMe: 19.6%) as negative impact of higher salary was offset by operating efficiencies. PAT grew 2.7%QoQ to Rs 20.7bn (DCMe: Rs 20.3bn) despite slightly higher tax rates. EPS was at Rs 14.7.
Outlook
HCL Technologies reported CC revenue growth of 3%QoQ largely in line with our estimates. EBIT margin grew 26bpsQoQ to 20.4% led by operating efficiencies. HCLT maintains its CC revenue growth guidance of 12%-14% (3.5% inorganic) which is ahead of peers in the large cap IT space. The management has maintained its EBIT margin guidance despite recent acquisitions which are margin dilutive. Revenue growth towards the upper end of guidance will drive upgrades. Maintain BUY with a TP of Rs 1,000.
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