HCL Tech Q3 Review – Margins To Improve Gradually: IDBI Capital

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HCL Technologies Ltd. revenue and profitability was above our estimates led by healthy growth in services and products revenues. The company’s IT services revenues (87% of revenues) increased 5.3% QoQ and products revenues increased 24.5% QoQ.

Going forward, we expect the company to report healthy growth in IT services revenues mainly led by healthy deal wins. This coupled with strong client addition and net addition of 10,143 bodes well for revenue growth.

In addition, we believe that with improvement in product business we expect margins to improve in coming quarters.

Further, HCL Tech’s aim to increase payout to 75% of net income for next five years is key positives.

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