Religare's reserach report on HCL TechnologiesHCLT has issued a profit warning for the Sep’15 quarter, forecasting tepid US$ revenue growth due to (1) negative FX impact of 80bps (2) a slowdown in the IMS segment due to transition issues and (3) client-specific issues in a public services ADM project, which should lead to a provision of US$ 20mn. We cut our FY16 US$ growth estimates by 2.5% and our EPS estimates by 3.5%. HCLT has disappointed on margins over the past two quarters, and this profit warning will continue to weigh on the stock.The profit warning was a negative surprise and would weigh on HCLT’s growth and margins over the near term. While this appears more of a client-specific issue with no direct read for the sector as a whole, we note that the frequency of client program disputes has been increasing of late. While valuations (15.5xFY17E) are fair, near-term weakness could persist on growth disappointment.For all recommendations, 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.
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