HCL Technologies
HCL Technologies (HCL) reported impressive set of numbers in Q4 FY08 (year ending in June) with revenue growth of 11.5 per cent q-o-q. For Q1 FY09 (ending September), the same is pegged at close to 7 per cent growth(rupee guidance). The company has forex forward covers of about $1.85 billion (equivalent to FY08 revenues).
In the coming quarter, the company is expected to book forex losses of close to Rs 100 crore (Rs 1 billion). The losses would be lower than the previous quarter due to unwinding of contracts worth $540 million in 4Q FY08. HCL has still not managed to optimise its selection policy to improve its fresher-to-lateral hiring; this still remains heavily skewed towards laterals.
Also, its SG&A as a per cent of sales is over 16 per cent (highest among peers), which provides the company an opportunity to cut costs and reduce margin pressures.
Overall, the uncertainties related to the demand environment, relatively high currency hedges (inability to benefit from a depreciating rupee) and client-specific issues would continue to be a drag on the stock price in the medium-term.
Analysts suggest that HCL's bid for Axon at 650 pence per share (Infosys' bid of 600 pence) will have a marginally negative impact on earnings. This is because HCL would have to borrow part of the funds (part from surplus cash) required for the same.
Image: Chairman and CEO of HCL Infosystems Ajai Chowdhry poses with the newly unveiled HCL ' Mileap ' laptop in New Delhi. | Photograph: Manan Vatsyayana/AFP/Getty Images
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