Result Update: HCL Technologies Ltd
(HCLT)
¾ HCLT's
operating results were marginally above expectations. The 4.9% (5.1% in 1Q)
volume growth in Software Services was above expectations.
¾ Management
has indicated continuing headwinds for the industry in the form of an uncertain
macro which is affecting decision making.
¾ We
have tweaked our earnings estimates for FY12. Rupee is expected to average 50 /
USD in the remaining part of FY12 (v/s Rs.48 assumed earlier). This is expected
to keep margins higher on a YoY basis, despite salary increments. EPS is
expected to be Rs.32.3 (Rs.30.8 earlier) post ESOP-related charges. We have
tweaked our PT to Rs.499 (Rs.496) as the increase in EPS estimates is largely
led by the rupee depreciation.
Result Update: Tata Consultancy
Services Ltd (TCS)
¾ TCS'
3Q operating results were in line with our expectations. Volume growth at 3.2%
(6.25% in 2Q) was impacted by seasonality.
¾ On
the macro side, TCS also conceded that, the uncertainty is likely to persist.
Client budgets have been largely finalized with mixed trends. About 1/3rd of
the sample clients (120) will have lower budgets in CY12.
¾ We
make changes to our earnings estimates. FY12E earnings now stand at Rs.55.8
(Rs.54.7 earlier). FY13 earnings are expected to be Rs.65.4 per share (Rs.62.2
earlier). We tweak our price target to Rs.1241 based on FY13 estimates (Rs.1240
earlier). We have accorded valuations which are almost similar to those of
Infosys. TCS' revenue growth in the past few quarters has been better than
Infosys and it has been able to restrict impact on margins. We maintain a BUY.
A sharp appreciation in the rupee against various currencies and a delay in
recovery in major user economies remain the key risks to our call.
Sourced From: Genesis Burson-Marsteller India
