HCL Technologies Marginal beat ; Target Price: Rs 540 :: Emkay

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HCL Technologies

Marginal beat, retain HOLD

HOLD

CMP: Rs 523                                        Target Price: Rs 540

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n     HCLT reported revenues at US$ 914 mn (+5.8% QoQ), ahead of Emkay expectations driven by Apps business (+5.4% QoQ) and IMS business (+8.5% QoQ). BPO revenues were flat QoQ

n     EBITDA margins at 16.7%, up ~100 bps QoQ a big relief after a long streak of disappointment in the past few quarters

n     See downside risks to ~110 bps mgn expansion in FY12 as co faces stiffer supply side headwinds (lateral focused hiring) and aggressive client hunting strategy 

n     Retain FY12E/13E earnings of ~Rs 32/38.4 despite marginal increase in US$ revenue estimates. Maintain HOLD with an unchanged TP of Rs 540, based on 14xFY13E earnings