HCL Technologies Ltd (Q3 F6/08): “Better positioned”
CMP Rs246, BUY
Target price Rs283, Upside 15%
ä HCL reports a lower than expected 5.2% qoq dollar revenue growth. Volume growth slows down though pricing improvements continue.
ä Core software services registers solid growth of 6.5% qoq while IMS and BPO revenues grow by sluggish 1.5-2% qoq.
ä EBITDA margin expands by 90bps qoq to 22.3% driven by improved realizations, higher utilization, SG&A leverage and offshore shift. Core software services margin improves by 95 bps.
ä Lower other income, due to forex loss, leads to a net profit growth of just 1.1%.
ä Management maintains F6/08 revenue growth outlook at 35% yoy on a reduced headcount target. Company expects a modest Q4 F6/08.
ä Reiterate BUY on HCL Tech with a price target of Rs283 implying 15% upside.
Click below for the quarterly update of HCL Technologies Ltd.
http://www.indiainfoline.com/content/rep/Result_Analysis/2008/4/1642008/hcltech_0408.pdf
Warm Regards,
India Infoline Research Team
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