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HCL Technologies: A Good Buy for September

HCL Technologies, the Indian multinational IT Services


Company, outperformed the market expectations in the first
quarter of the financial year 2017. The Company surpassed the
estimates made by the analysts and reported 14.8 per cent Y-o-Y
growth and 6.3 per cent Q-o-Q growth in the quarter ended 30th
June where the net profit was at Rs 2,047 crores, higher than the
projection of Rs 1,892.70 crores.
The fourth largest IT exporter had reported a net profit of Rs
1,926 crores in the previous quarter. It reported total revenues
of Rs 11,336 crores, up 6 per cent quarter on quarter (QoQ) and
15.9 per cent on a year-on-year (YoY) basis.

A quick Overview of Q1 FY17

Revenue at Rs 11,336 crores; up 6.0 per cent QoQ & 15.9 per cent YoY
Net Income at Rs 2,047 crores; up 6.3 per cent QoQ & 14.8 per cent YoY

Revenue in constant currency up 6.0 per cent QoQ & 11.2 per cent YoY
Revenue at USD 1,691 mn; up 6.5 per cent QoQ & 10.0% YoY
Net Income at USD 305 mn; up 7.1 per cent QoQ & 9.5% YoY

Key catalysts for growth


Last Twelve Months (LTM) year on year revenue growth in constant currency

1.
2.

Revenue of the Company grew by 10.7 per cent.


Broad based growth was recorded across all revenue segments:
Americas and Europe grew by 13.7 per cent and 10.6 per cent respectively.
Driven by Infrastructure Services at 18.0 per cent, Engineering and R&D Services at 10.4
per cent, Business
3. Services at 10.1 per cent, and Application Services at 4.7 per cent.
4. Vertical growth led by Public Services at 24.7 per cent, Lifesciences & Healthcare at 21.5
per cent.

5. Telecommunications, Media, Publishing and Entertainment at 17.8 per cent, Retail and
CPG at 14.9 per cent,
6. Manufacturing at 7.7 per cent and Financial Services at 5.7 per cent.

Consolidated Balance Sheet


PARTICULARS

AS ON
31-Mar-16

30-Jun-16

729.3

1,240.00

Accounts Receivables, net

7,721.30

8,550.40

Unbilled Receivables

3,001.50

2,356.60

10,587.10

10,622.40

536.5

758.4

2,410.30

2,492.90

24,985.90

26,020.60

Property and Equipments, net

4,323.10

6,643.20

Intangible Assets, net

6,419.40

6,357.60

160.1

150.3

12.6

3,878.90

3,867.20

39,767.30

43,051.40

9,508.50

11,408.00

973.2

791.8

1,263.50

1,810.70

Total Liabilities

11,745.20

14,010.50

Total Stockholders Equity

28,022.10

29,040.80

Total Liabilities and Stockholders Equity

39,767.30

43,051.40

Assets
Cash and Cash Equivalents

Fixed Deposits
Investment Securities, available for sale
Other Current Assets
Total Current Assets

Investments in Equity Investee


Other Investments
Other Assets
Total Assets
Liabilities & Stockholders Equity
Current Liabilities
Borrowings
Other Liabilities

Transformational and blue chip customer acquisition


HCL Technologies has signed 13 transformational deals during this quarter, spreading across
service lines and industry verticals. The broadbased business wins were driven by next
generation integrated offerings NextGen ITO, BEYONDigital and IoT WoRKS, reflecting
investments in Internet of Things, digital technologies, cloud, automation as well as artificial
intelligence.

Investment Option
At CMP of Rs 786.50 HCL Tech share price is trading at a P/E of 17.05, the market cap of the
company is 1,11,597.48 crores as of today. Dynamic Levels recommends a buy on HCL at 801
with a target of Rs 855 and a stoploss of 748.

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team.
Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

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Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his
Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the
subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Nabarupa Kanjilal