HCL Technologies Ltd (Q3 F6/08): “Better positioned”

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.




Warm Regards,


India Infoline Research Team


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