ICICIdirect.com's report on HCL Technologies
HCL Tech reported weak Q3FY15 earnings as growth and margins came in below our estimates
US$ revenues were flat QoQ ($1,491 million), below our $1,498 million estimate (constant currency revenues grew 2.7% QoQ). EBIT margins declined 246 bps QoQ to 21.3% (23% estimate) led by adverse currency, partial wage hikes and business reinvestments
Reported PAT of Rs 1,683 crore was also below our Rs 1,812 crore estimate led by a decline in revenue and margins
"We expect HCLT to report revenue, PAT CAGR of 13%, 12% in FY14-17E with average 22.3% margins in FY15-17E led by order book conversion. We roll forward our valuation to FY17E and now value the stock at 16x FY17E EPS of Rs 63 (16.7x FY16E EPS) to arrive at our target price of Rs 1,000. The lower multiple is to account for longer time horizon", says ICICIdirect.com research report.
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