HCL Technologies, the global IT services provider, reported a consolidated net profit of Rs 10.21 billion; up 59% and revenue of Rs 64.3 billion; up 29.8% for the third quarter. On quarter on quarter basis, it posted a rise of 8.5% in the net profit and 2% in the revenue.
Commenting on the results, Dipen Shah, head- private client group research, Kotak Securities said, ''HCL Tech's results were higher than expectations, on the margins front. Revenue growth of 2.9% in CC terms was in line with expectations. It is also higher than that reported by Infosys and TCS. HCL Tech has reported high revenue growth and consistent improvement in margins over the past few quarters. The company needs to improve growth rates in non-IMS businesses and implement more levers to sustain margins as utilization levels are at high levels and cost efficiencies may not yield significant gains, going ahead.''
Meanwhile, Madhu Babu, HDFC Securities, opined, ''We remain bullish on HCL Tech considering its strong traction in IMS which is an underpenetrated service line. HCL Tech derives the highest share of revenues from Infrastructure managed services (34% of revenues) among Tier 1 IT vendors. Margin beat in 3QFY14 leads us to further upgrade our EPS estimates by 1.7/4% for FY15/FY16E. We see scope for rerating owing to consistent operating performance. Maintain Buy.''
Manik Taneja, research analyst, Emkay Global Financial Services, said, ''Inline revenues at USD 1,361 million (+3% QoQ), however margins improved by 70 bps QoQ to 26.7% aided by 190 bps improvement in Infra segment driving strong performance. Operating metrics performance remains decent with Europe (+4.8% QoQ) leading the growth. US continues to be 'relatively soft' similar to peers Infosys and TCS. Deal wins remains strong at US$ 1bn+ TCV worth of deals. However attrition remains elevated which along with the increase in DSO remain the only weak points in an otherwise strong performance. Raise FY15/16EPS by 3% to Rs 99/112 on a/c of higher margin resets. Retain Accumulate with target price of Rs 1,600. HCLT's performance stands out v/s peers Infosys and TCS.''
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