According to Prabhudas Lilladher, HCL Technologies is expected to witness downtick by 2‐4%, despite possibility of earnings upgrade as revenue moderation is key negative inline with expectation, says the report.
"HCL Tech reported Q1FY15 revenue softer than PLe/consensus expectation. The company reported a revenue growth of 1.9% QoQ (3.2% @cc) in USD terms for Q1FY15. HCL Tech has signed multi‐year multi‐million dollar deal in excess of TCV $1bn+ in Q1FY15 including ~15 transformational deals. The company has declared an interim dividend of Rs6/share. We expect stock to witness downtick by 2‐4%, despite possibility of earnings upgrade as revenue moderation is key negative inline with our expectation.
HCLT revenue grew by 3.7% QoQ to Rs87.35bn for Q1FY15 (PLe Rs88.4bn, Cons: Rs88.1bn) in INR term, whereas revenue in USD terms grew by 1.8% QoQ to $1,433mn (PLe: $1,460m, Cons.: $1,456m). EBITDA margin eroded by 122bps to 25.1% (PLe: 26.5%, Cons: 25.6%), due to wage hike. EPS grew by 2% QoQ to Rs26.51 (PLe: Rs25.44, Cons.: Rs24.84); due to higher other income Rs3580m (Q4FY14: Rs2110m).
Revenue for US, Europe and APAC grew by +5.6% (+5.7% @cc), ‐0.3% (+2.7% @cc), and ‐8.6% (‐6.4% @cc) QoQ respectively. In terms of services, IMS, BPO and Engg R&D, grew by +1.8% (+3.6% @cc), ‐0.1% (+1.1% @cc) and +7.5% (+8.1% @cc) QoQ respectively. In terms of verticals, Financial Serivess, Retail and Telecom grew by +1.1% (+3.0% @cc), +13.8% (+15.8% @cc) and ‐0.4% (+0.3% @cc) QoQ respectively.
Attrition moderated by 30bp to 16.6%, whereas utilization (blended) eases by 180bp to 82.7% as employee addition was up by 155% to 3.8k. We see limited room for utilization uptick", says Prabhudas Lilladher research report.
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