Hold HCL Technologies: Indiabulls Securities

Indiabulls Securities Research has maintained its hold rating on HCL Technologies in its report dated July 6, 2009.

“HCL Technologies (HCL) reported better than expected results for Q3’09 with 11.3% qoq growth in revenue of USD 564.5 mn, including Axon. Besides a better operating performance, the sharp depreciation in the rupee against the dollar of 4% qoq contributed to a 14.9% sequential growth in revenue in rupee terms. HCL continues to maintain a strong order book for the next couple of years. After swelling up its order book with USD 1 bn worth of projects last quarter, HCL signed 11 new contracts worth USD 760 mn in Q3’09. At the current market price of 191.6, the stock is trading at a forward P/E multiple of 8.7x and 8.3x for FY09E and FY10E. However, considering the Company’s recent margin-dilutive acquisitions, we believe that the stock would continue to trade in a range in the near term. Besides, our DCF valuation suggests a fair value of Rs 214, assuming a 12.4% WACC and a 5% terminal growth rate. This provides an upside of 12% over the current price; thus, we maintain our Hold rating,” says Indiabulls Securities’ research report.

source: Moneycontrol

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