HCL Technologies' (HCLT) Q3FY21 revenue growth of 3.5% QoQ in CC was slightly higher than our forecast of +2.9%. However, EBIT margin saw a strong improvement of 130bps to 22.9% and was a beat to our forecast, said IDBI Capital in its report. EPS of Rs 14.7, 25.7%/+31% QoQ/YoY (aided by lower ETR) was even bigger beat to our forecast, it said.

Q3FY21 saw 13 transformational deals and HCLT is confident of improving the deal-win momentum going forward. It has increased its Q4FY21 revenue guidance to 2%-3% QoQ vs. 1.5%-2.5% earlier and FY21 EBIT margin guidance to 21%-21.5% vs. 20%-21% earlier.

Commenting on the result review, IDBI Capital said, "We factor the Q3FY21 beat, guidance and increase our FY21/22/23 revenue (USD) forecast by 1.6%/3.7%/3.6% and EPS forecast by 11.1%/10.5%/8.9%. We now forecast revenue/EPS CAGR of 10.5%/9% over FY21-23E."

IDBI Capital maintains Buy with new TP of Rs 1,190 now based on 20x FY23E (vs. 18x earlier).

HCLT has secured 13 transformational deals (net-new) and the TCV of the same is +13% YoY. Its deal-pipeline remains strong and it is confident of improving the dealwins momentum even further. Factoring the same, it has once again increased its FY21 EBIT margin guidance to 21%-21.5% vs. 20%-21% earlier. Also, it now expects revenue growth of 2%-3% QoQ in CC for Q4FY21 vs. 1.5%-2.5% earlier, the broking firm said.

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