HCL Technologies Ltd. | Q2FY15 Result Update | Strong Performance: $-revenue growth significantly above our estimates | Maintain HOLD | TP Rs.1,954 ::IndiaNivesh

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HCL Technologies Ltd (HCLT) Q2FY15 performance was above our expectations on all fronts. USD revenues grew by 4.0% Q/Q to $1,491 mn (v/s INSPL est: $1,457 mn) led by 4.4%/3.7%/2.0% qoq increase in Software, Infrastructure and BPO services, respectively. Higher than consensus expected $-revenue growth (1.6-2.5% % Q/Q) was a positive surprise for the street. The key reason for positive surprise was transformational deal ramp-up and solid growth in engineering services. Rupee revenue grew by 6.3% Q/Q to Rs 92.8bn. EBIT margin contracted 10bps Q/Q to 23.8% (v/s 23.9% in Q1FY15). HCLT reported forex gain (net) of Rs.150 mn (v/s forex loss of Rs 530mn in Q1FY15). During the quarter, other income went down 43.9% Q/Q to Rs 2,010 mn (v/s Rs 3,580 mn in Q1FY15). Tax rate during the quarter was 21.0% (v/s 21.7% in Q1FY15 and 21.0% in Q2FY14). Net profit grew by 2.2% Q/Q to Rs 19.2 bn in Q2FY15. Adjusting forex and other income, net profit went up 8.3% Q/Q to Rs 16.9 bn (v/s Rs 15.7 bn in Q1FY15 and Rs 15.4 bn in Q2FY14). During the quarter, HCL has signed 15 Transformational engagements with more than $1bn of Total Contract Value (TCV).

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