EUR 120.00 For Business Accounts Only

MOSL: Morning India (10/May/19): 1. HCL Technologies; 2. Asian Paints; 3. Voltas; 4. Tata Comm; 5. PNB Housing; 6. GSPL; 7. EcoScope

MOrning India (10/May/19): 1. HCL Technologies; 2. Asian Paints; 3. Voltas; 4. Tata Comm; 5. PNB Housing; 6. GSPL; 7. EcoScope

 

Today’s top research idea

HCL Technologies: Strong exit to facilitate improved organic growth

• For FY19, HCLT's CC revenue/EBIT/PAT grew by 11.8%/22.0%/15.2% YoY. Organic revenue growth was 6.5% YoY. The company exited the year with 15.3% YoY CC growth (in-line), but EBIT margin shrank 60bp to 18.9%, missing our estimate by 50bp.
• Its guidance for FY20 revenue growth is 14-16% CC, of which organic growth guidance is 7-9%. However, the EBIT margin band of 18.5-19.5% is 100bp lower than the previous year due to investments in Mode-2, ramp-up in large deals, and inflation in talent costs.
• This drove 4.4% cut in our FY20 earnings estimate. Our price target of INR1,200 (6% upside) discounts the forward earnings in Services business by 14x and that in Products by 8x. Maintain Neutral.

 Piping hot news

Maruti Suzuki cuts production by 10% in April

• The company produced a total of 1,47,669 units in April, down 9.6% from 163,368 units a year ago, it said in a regulatory filing. The company cut production of passenger vehicles, including the Alto, Swift and Dzire, by 10.3% to 1,44,702 units compared with 1,61,370 units in April 2018. Barring utility vehicles, the company reduced production of all other segments, including that of its big selling compact and mini segments, last month.