HCL Technologies Q4FY11 Result Update; In line results, retain HOLD; Target: Rs540 :Emkay

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HCL Technologies

In line results, retain HOLD

HOLD

CMP: Rs503                                        Target Price: Rs540

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n     HCLT reported rev at US$ 963 mn (+5.3% QoQ) in line with est with growth yet again led by IMS (+10.5%QoQ) and Apps (+4.3%QoQ) while BPO struggles continue(-4.2%QoQ)

n     Op mgns at 18% (+130 bps QoQ) , in line with est driven largely by SG&A leverage (down ~90 bps QoQ). Marginal profit beat aided by higher other income

n     Growth well spread across geographies with non top 20 clients continuing to grow faster than co. Manufacturing leads the growth with a 8% QoQ revenue increase

n     Tweak FY12E/13E EPS lower by 0.6/1.7 to ~Rs 31.8/37.7 driven by lower mgn assumptions (17.4/16.8% V/s 17.6/17.3% earlier). HOLD , unchanged TP of Rs 540, on 14xFY13E EPS