HCL Tech lost almost 10% in last trading session after its first quarter results. We wrote a white paper on HCL Tech this year in the month of April 2014 when it was trading in the range of Rs 1,250 – Rs 1,325.

Had anything changed in the last 6 months?

Before heading into the debate, let’s look at the quarter one results for the June 2015 year end results:

Q1 – 2015 Margin %
Revenues 8,735 100%
Direct cost 5,522 63.22%
Gross Profits 3213 36.78%
Selling expenses 1021 11.69%
Operating profits 2192 25.09%
Other income 358
Net profits 1873 21.44%

 

HCL Tech operating and net profit margins are really impressive compare to Mindtree that we shared with you few days ago. Looking at their first quarter results it looks that they will report their returns on equity in range of 36% – 39%.

There is no alarming signals that we see in low revenues. Overall, the consensus estimate it’s EPS for the June 2015 will be around Rs 103 and they are on its track to achieve it. We are estimating its intrinsic values for the June 2015 in the range of Rs 1550 – Rs 1850. This is after couple of months the price has fallen out and below its intrinsic value range.

We will be accumulating if we see any more weakness and for more updates keep a close eye on this section from us.

Click on the link to read the white paper on HCL Tech: HCL Tech – White paper March 2014