HCL Technologies Ltd. (HCLT)|Q1FY15 Result Update | Below Expectation Performance: $-revenue growth significantly below our estimates | Maintain HOLD | TP Rs.1,697:: IndiaNivesh

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HCL Technologies Ltd (HCLT) Q1FY15 performance was below our expectations on
all fronts. USD revenues grew by 1.9% Q/Q to $1,433 mn (v/s INSPL est: $1,457
mn) led by 2.2%/1.9% qoq increase in Software and Infrastructure services,
respectively, partially offset by 1.5% qoq decline in BPO services. Lower than
consensus expected $-revenue growth (3.0-3.6% Q/Q) was negative surprise for
the street. The key reason for the disappointment was delay in the ramp-up of
few transformational deals in IMS space. Rupee revenue grew 3.7% Q/Q to Rs
87.4bn. EBIT margin contracted 30bps Q/Q to 23.9% on back of wage hike, partially
offset by lower depreciation expenditure. HCLT reported forex loss (net) of Rs.530
mn (v/s Rs 530mn in Q4FY14). During the quarter, other income went up 69.7%
Q/Q to Rs 3,580 mn (v/s Rs 2,110 mn in Q4FY14). Tax rate during the quarter was
21.7% (v/s 16.5% in Q4FY14 and 20.2% in Q1FY14). Net profit grew by 2.2% Q/Q
to Rs 18.7 bn in Q1FY15. Adjusting forex and other income, net profit went down
6.4% Q/Q to Rs 15.6 bn (v/s Rs 16.8 bn in Q4FY14 and Rs 15.3 bn in Q1FY14).
During the quarter, HCL has signed 15 Transformational engagements with more
than $1bn of Total Contract Value (TCV).

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