ICICIdirect.com's report on HCL Technologies
HCL Tech reported a mixed set of Q4FY15 earnings as growth was above our estimates but margins were weak
US$ revenues grew 3.2% QoQ ($1,538 million), above our 3% growth and $1,535 million estimate (constant currency revenues were up 2.9% QoQ)
At 20.2%, EBIT margins were significantly below our 21.8% estimate (declined 110 bps QoQ) led by rising business investments
Reported PAT of Rs 1,783 crore was below our Rs 1,805 crore estimate led by lower margins
"We expect HCLT to report revenue, PAT CAGR of 15%, 13% in FY15-17E with average 21.8% margins in FY15-17E compared to 24%, 41% in FY10-15, respectively, with 18.8% margins led by order book conversion and steady execution. We continue to value the stock at 17x FY17E EPS of Rs 65 to arrive at our target price of Rs 1,100. We maintain our BUY rating", says ICICIdirect.com research report.
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