Good Value Buy Tips : HCL Tech – Target Price Rs.600

 Company has reported strong performance for 4QFY11 (Year end in June) with revenue, EBITDA and net profit exceeding market expectations by around 3%.

 EBIT margin expanded by 110 bps against the guidance of 100 bps expansion. Thus the management has kept up its promise.

 USD revenue growth at 5.3% qoq is above street estimate and also at the higher end of the peer group( USD revenue growth of the peer group ranges from 1 -7%.

 The company has signed 20 new transformational deals in 4Q and this suggests continued revenue visibility.

 The market expects EBIT margin expansion of 50-100 bps for FY12 though the management has not committed on it. This seems achievable as the business prospects are improving and current margin is substantially lower than that of FY10.

 USD revenue growth of 5.3% was mainly from 10.5% growth in infrastructure services, which constitutes 25% of revenue. This has offset the lower than expected growth of 4.3% from software and - 4.2% revenue growth from BPO.

 Among the verticals, the standout areas are energy, utilities, public sector, publishing and entertainment.

 The company is undergoing a positive long term transformation and this has increased attraction on the stock. After the revamp of BPO business in FY12, the company will have the most balanced portfolio among peers with a healthy mix of enterprise solutions, applications, infrastructure services and engineering services.

 The only concern is regarding current depressed margins and this need to be addressed.

MARKET OUTLOOK

Stock market slip very sharply because of that some good fundamental stock at good low value. it is good opportunities for value buy pics.

Several fundamentally strong midcap stocks are trading at attractive valuations. Among midcaps, our preferred stocks are IRB Infrastructure, Indian Hotels, Sintex Industries, Shree Renuka Sugars, Sobha Developers, KEC International, Persistent Systems etc