-------- Forwarded Message --------
Subject: HCL Tech: Sep'15 QTR Result Is Largely In Line With Revised
Street Estimates
Date: Tue, 20 Oct 2015 09:48:31 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
*Expect some fireworks only above 875 up to 935-990
*
Quarterly PAT came around Rs.1726 cr against revised median estimate
of Rs.1723 cr
and EPS at 9.99 (Exp 9.80) vs 10.21 (QOQ) & 12.00 (YOY)
*Is the management's profit warning action overdone ?*
*CMP: 858*
*
*
*Either buy on breakout above 866-875 or in dips around 830-811-800*
*
*
*TGT: 905-921-935 (1-3M)*
*
*
*TGT: 990-1045 & 1165-1280 (12-24M)*
*
*
*TSL<790*
Note: Consecutive closing below 790 for any reason, HCL can fall up to
760-740-725-700 levels, where it can be again accumulated for better
investment buying average.
Sep'15 QTR result published yesterday by HCL was by and large in line
with revised street estimates after management's guidance warning last
month.
As expected QTR numbers is very weak and PAT fall by 8% due to cross
currency headwinds and one time provision made to compensate for loss of
revenue from a particular large client. Although the result showed that
the infrastructure management services (IMS) is a drag for the company,
but its core manufacturing clients added more projects. IMS contribute
nearly 23% of the revenue of HCL.
The other business verticals of HCL also reported slower sequential
growth of under 1% on QOQ basis (financial services, manufacturing,
retail & telecom together comprises of around 77% of total revenue of HCL)
The management is confident about its large order book and expected for
the revenue reflection of the same from Jan'16 on wards and is not
emphasizing too much on short term QOQ numbers. The management has
pointed out the longer term trailing 12 month numbers (TTM), where the
above verticals has shown good growth as a large multiyear order takes
time to reflect in revenue stream.
Analysts are pointing out that this is the third consecutive earning
downgrade for HCL. There is immense competition in IMS from other tier-1
players, HCL has somewhat weak software applications portfolio, which
reflects in multi-year under performance and the company lags
competition in capturing digital opportunity (artificial
intelligence-AI, automation etc).
But, all the above negative news for HCL may be already discounted by
the market going by the time & price action of the scrip. Technically,
800 zone should hold for HCL, unless we hear some more negative news or
further earning downgrades/weak guidance from the management.
Looking ahead, apart from the export revenue, all major IT companies may
be benefited immensely from our own domestic opportunity (Digital India
theme) in the coming days and HCL might also be one of them.
HCL is also the the process of acquiring a Bangalore based engineering
services firm "Concept to Sillicon System" (C2SiS) specializes in
system-on-chip and design services and it has large Fortune-100/500
client base.
*As par BG metrics & current market parameters:*
*
*
*Present median valuation of HCL may be around: 870 (FY:15)
**Projected fair valuations might be around : 905-990-1070 (FY:16-18)
*
SCRIP EPS(TTM) BV(Act) P/E(AVG) Low High Median
200-DEMA 10-DEMA
HCLTECH 43.17 111.97 20 884.01 856.66 870.34 905.12 849.98
HCLTECH 46.55 125.55 20 917.97 889.57 903.77 905.12 849.98
HCLTECH 55.75 140.75 20 1004.59 973.51 989.05 905.12
849.98 830
HCLTECH 65.15 156.25 20 1085.99 1052.39 1069.19
905.12 849.98 830
Analytical Charts:
<http://2.bp.blogspot.com/-msQA_So-2Ko/ViW89P03VpI/AAAAAAAAEfQ/mBZN4erQlvM/s1600/HCL-16-10-2015.png>
<http://4.bp.blogspot.com/-JtFiVZyJjYI/ViW8-hgHLII/AAAAAAAAEfY/gWxFtLiD27g/s1600/HCL-FIBB-16-10-2015.png>
<http://3.bp.blogspot.com/-QF9MZ8Px--U/ViW9A9eDyRI/AAAAAAAAEfg/kGXViBeB_7E/s1600/HCL-PATTERN-16-10-2015.png>
<http://4.bp.blogspot.com/-SBwx-9ugoNw/ViW9EegKrJI/AAAAAAAAEfo/aXrus7rtvOo/s1600/HCL-WK-16-10-2015.png>
<http://1.bp.blogspot.com/-460gcFS8tZo/ViW9F9L2kPI/AAAAAAAAEfw/6oWIEzu9R-g/s1600/HCL-PATTERN-LT-16-10-2015.png>
<http://2.bp.blogspot.com/-dyrux0riyVI/ViW9H0FTlWI/AAAAAAAAEf4/4XuSCT_dV8o/s1600/HCL-TL-16-10-2015.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
--
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