Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: [email protected]LONG TERM INVESTMENT CALLBUY19 October 2011 Company Report | Q1FY12 Result Update Wage hikes impact margins, but top line remains strong HCL Technologies Ltd. (HCLT) reported mixed results for the first quarter of the year. The company revenue crossed the USD 1 bn mark for the quarter for the first time. The quarterly revenue has doubled over the last three years. Volume Growth: HCLT reported revenue of INR 46.51 bn which was up by 25% and 8.2% on a YoY and a QoQ basis respectively. EBITDA for the quarter stood at INR 7.9 bn, up 32% from the same quarter in the previous year. PAT posted for the qu arter was INR 4.9 bn, up 50% YoY but marginally down by -2.7% QoQ. HCLT saw volume growth of 5.1% this quarter. Price realization increased 1.2% QoQ. Offshore revenue stood at 41.7%, and Onsite revenue stood at 58.3%. Utilization excluding trainees was at 74.1%. If we include trainees, utilization was at 70.1%. HCLT added 3,474 employees (net) in this quarter, taking the total employee base to 80,520. New deals in the quarter: HCLT has seen 12 new wins for the quarter with the US and Europe driving the growth. The quarter saw strong growth across the service lines with Engineering and R&D Services growing by 8.6% and Customer Applications and Infrastructure Services growing at 7.3% and 5.8% respectively. The Retail & CPG and the Manufacturing verticals also showed good growth of 12% and 8.2% respectively. In constant currency terms the BFSI segment grew by 2.1% QoQ, whereas the Telecom segment contracted by 2% QoQ. The EBIT margins saw a decline in this quarter, by 120 bps to 14.3% but have been less than projected by the company. Positive growth outlook: HCLT is confident of acquiring greater market share in the quarters moving ahead and is well positioned to do this. The IT services space has seen an increase in churn rates at 50% QoQ and with new long term contracts of peer companies coming up for renewal in the second quarter, HCLT is looking to capitalize using their operation efficiency and better pricing model. Although there are global macro economic concerns, HCLT did not witness any considerable slowdown in demand over the last quarter and financial services continue to look strong. The next quarter will be extremely important for the company as it looks to win important deals in the quarter which will have a significant impact on the financial year moving ahead. HCLT expects strong revenue growth in orders in the October-December quarter as it taps new markets in Japan and Europe and seeks to benefit from contract renewals due in the U.S. Industry IT / ITES CMP (INR)401 Target (INR) 495 Upside / Downside (%) 23.4% 52 week High/Low (INR)528/360 Market Cap (INR bn)27.67 3M Avg. Daily Volumes 1339.69 P/E (FY12 E) 12.6x Shareholding Pattern (%) Promoters 65% FIIs 21% DIIs 6% Others 8% 1 – Year Stock Chart 60 70 80 90 100 110 120 130 O c t N o v D e c J a n F e b M a r A p r M a y J u n J u l A u g S e p O c t HCL Nifty Stock Performance (%) 1 Month 3 Months 1 Year HCLT 14.1% -11.6% 2.0% NIFTY 0.7% -8.3% -15.6% (INR in mn) Particulars Actual Estimates Total Income 46,513 45,623 EBIDTA 7949 7,789 Reported PAT 4,968 5,247 * Source: Bloomberg, Unicon Research
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8/3/2019 HCL Technologies Ltd - Q1FY12 Result Update
Return Range >= 20% 10% to 20% -10% to 10% -10% to -20% <= -20%
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