**HCL Tech – Q3 FY20 (Un Audited –Cons)**
Total revenue from operations at 18,135 Cr
15,699 Cr (15.52%) YoY | 17,527 Cr (3.91%) QoQ
Nine Months ending revenue: 52,089 Cr Vs. 44,437 Cr (17.21%)
Net Profit of 2,944 Cr
2,605 Cr (13.01%) YoY 2,711 Cr (8.59%) QoQ
Nine Months ending Net profit: 7,885 Cr Vs. 7,570 Cr (4.13%)
EPS (in Rs.) 10.85
9.57 YoY | 9.99 QoQ
Nine Months ending EPS: 29.06 Vs. 27.38
View: Strong result and above expectation. YoY and QoQ revenue and profit both have increased and also FY20 revenue guidelines are for 16.5% to 17% and EBIT is around 19% - 19.5%.
**Business Updates & Highlights**:
Revenue in constant currency up 2.1% QoQ & 16.4% YoY.
EBITDA in Q3FY20 is around INR 4,470 Cr Vs. 3,647 Cr in Q3FY19 Vs. 4,103 Cr in Q2FY20 and EBITDA margin is 24.7% in Q3FY20 Vs. 23.1% in Q3FY19 Vs. 23.4% in Q2FY20.
EBIT in Q3FY20 is around INR 3,670 Cr Vs. INR 3,086 Cr in Q3FY19 Vs. INR 3,497 Cr in Q2FY20 and EBIT margin is around 20.2% Vs. 19.6% Vs. 20% up by 68bps in YoY and 28 bps in QoQ.
Quarterly revenue exceeds US$ 2.5 bn mark, exceeding the US$ 10 bn annualized revenue run rate. EBIT exceeded US$ 0.5 bn milestone this quarter
HCL Technologies have secured “A -” credit rating with Stable Outlook from Standard & Poor’s (S&P Global). The rating reflects that S&P expects the company to maintain its market position and strong operating cash flows over the next 12-24 months.
HCL’s strong growth at 16.4% YoY in constant currency, led by double digit growth across Segments. Products & Platforms 72.8%, IT and Business Services 10.4%, Engineering and R&D Services 12.8% (on YoY Constant Currency basis).
Geographical segment Americas cover 62.8%, Europe – 29.2% and ROW – 8%.
Total employee as of Dec 2019 is 149,173 Vs. 147,123 in Q2FY20 Vs. 132,328 in Q3FY20.
Total client as of Dec 2019 $100Mn is 15 (added 2 new client in this quarter) and $50Mn is 32 (added 2 new clients in this quarter). Top 5 clients contributed nearly 15.2% of their revenue and top 10 clients contributed 22.4% of their revenue. Total active as of Dec 2019 is around 1322 (Very strong)
**Revenue: FY'20 Revenues are expected to grow between 16.5% to 17.0% in Constant Currency (Very positive). Operating Margin (EBIT): FY’20 expected Operating Margin (EBIT) range is from 19.0% to 19.5**
The Board of Directors has declared an Interim Dividend of Rs.2/- per equity share on face value of Rs.2/- per equity share of the Company, for the Financial Year 2019-20. Recently given bonus share in the ratio of 1:1 in the month of Dec 2019.
ROE and ROCE is around 24% and 31% respectively and book value per share is around INR 248 and share is currently trading at 2.4x of its book value. Company is currently trading at annualized PE of around 15.5 which is very fair as per Industry benchmark. Promoter holding in the company is around 60% which is too good and stable, FIIs and mutual fund hold around 28% and 5.8% respectively. Company has cash and cash equivalent as of Dec 2019 is INR 3,282 Cr. Borrowing as of Dec 2019 is INR 4,086 Cr its slightly up as compare to March 2019.
**Share View**: Share price high 602 (52 week) and now 598. As a leading global technology company HCL offers its services and products through three business units - IT and Business Services (ITBS), Engineering and R&D Services (ERS) and Products & Platforms (P&P). HCL delivers holistic services in various industry verticals, categorized under Financial Services, Manufacturing, Technology & Services, Telecom & Media, Retail & CPG, Life Sciences & Healthcare and Public Services.
Short term outlook is also good. Long term investor should continue with the company and should be added on every dip/correction. FY 20 guidelines for revenue and EBIT is double digit which is also looks very positive signal.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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