HCL Technologies Ltd announced its Consolidated Q2 FY2013, December ending quarter, results on 17 January 2013. While the company’s top line came in line with Bloomberg consensus estimates, its bottom line beat street estimates. A glimpse of the results is as follows:
While HCL reported 3.0% sequential increase in revenues to `6,273.8 Crores, its net profits jumped 9.0% q-o-q to `964.7 Crores in Q2 FY2013. The company’s revenues growth was backed by strong volume growth of 3.0%, which came higher than its larger peer TCS. However, the expansion in business volumes lagged the growth reported by INFY. Nevertheless, HCL reported notable increase in both EBIDTA and PAT margins. The company’s EBIDTA margins improved 40 basis points (bps) sequentially to 22.6% whereas its PAT margins expanded 85 bps q-o-q to 15.4% during the quarter. Furthermore, HCL announced a dividend of `2 per share for the quarter.
With improved margins quarters over quarters, HCL may narrow down its valuation gap with the larger peers TCS and INFY. The company is currently trading at ~10.5x of its FY2013E EPS, which looks inexpensive compared with its peers. We advise to accumulate the stock at current juncture.
Regards,
Team Microsec Research
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