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BANGALORE: Among the big Indian IT companies, HCL Technologies has been the undisputed star of the stock markets in recent years. It's the smallest of the top five, and has tended to receive the least public attention - overshadowed by TCS' and Cognizant's strong performances.\n
But the $5-billion, Shiv Nadar-promoted company's rise has been phenomenal. Over the past three years, its share price has risen by 249%. In comparison, TCS was up 139% and Infosys<\/a>, the worst performer, just 34%. The gap between HCL and the rest was equally significant over the past year. HCL rose 64%, TCS and Cognizant both grew around 35%; Infosys was once again the laggard at 15%.
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There's good reason for this. Its revenue growth has been consistently high, and above the industry<\/a> average growth. But what's been remarkable has been net profit growth, which was 42%, 50.5% and 30.9% in dollar terms in each of the past three years (Infosys' respective figures were 1.5%, 0.5% and 14.5%).
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\nThe company's operating margin - one of the best measures of the efficiency of a company's operation - used to be 14% three years ago, when Infosys' was close to 30%. In the past quarter, it was 24.2%, just a shade behind Infosys' 25.1%. In just the past year, it improved the operating margin by nearly 4.5 percentage points.
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Investors use a measure called the price-earnings (PE) ratio to evaluate the relative attractiveness of a company's stock price. It is a valuation multiple that reflects earnings\/profit growth and the predictability of this growth. Infosys and Wipro<\/a> have traditionally had a much superior PE ratio, but Pramod Gubbi, director of sales in brokerage firm Ambit, says he expects HCL Technologies' PE ratio to cross that of Infosys and Wipro over the next four quarters. In other words, investors will then be willing to pay a higher price for a dollar of HCL earnings, than for a dollar of Infosys or Wipro earnings.
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\nVarun Vijayan, IT analyst at the brokerage firm PhillipCapital, notes that HCL Technologies has outperformed its peers, expanding its margins and improving operating cash flows in the past two years. \"They have been closing $5 billion worth of deals in each of the last two financial years, and a large chunk of it is coming from new clients and expanded scope of work in some of the service lines,\" he says.
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HCL discovered its pot of gold in an area called infrastructure management services (IMS). It recognized - much before most of its Indian peers - that this was a space ripe for large-scale outsourcing, and also one where Indian vendors could outbid global players like IBM<\/a> and HP<\/a>. IMS involves the management of the entire IT infrastructure of a company, including equipment, data, related policies & processes - an area that's not core to most companies and yet an increasingly important part.
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In the past few years, IMS has grown extremely rapidly for HCL, many of the contracts being those that were previously handled by global IT majors. HCL Technologies CEO Anant Gupta recently told TOI that a big reason for this was that HCL had no vested interests in the space. \"Unlike some of our global competitors (read IBM, HP, Dell<\/a>), we don't have to sell servers, storage or networks<\/a> to customers, so customers have confidence we will give them the best options,\" he said.
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The pace of growth in the space has slowed down a bit, but it is still winning big contracts. In just the past few months, it won a $500-million contract from Pepsi<\/a>, a $400-million contract from DNB Bank, Norway, and a $400-million contract from Alcatel-Lucent.
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\nGubbi says HCL is still several steps ahead of peers with respect to selling and delivery capabilities in IMS and that IMS still has a lot of headroom for growth. Dipen Shah, head of private client group research in Kotak Securities, however notes that HCL Tech's growth from infra services has slowed down in the last two quarters while Wipro is showing some good momentum in terms of deal wins. \"We are seeing contrasting trends with regard to these two players. Though PE valuations of Wipro and HCL are somewhat similar, we will need at least 2-3 quarters to see how the action pans out,\" he says.
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\nGubbi is also impressed by HCL's innovative approaches towards relatively commoditized service lines such as application support and maintenance, and says it is able to cross-sell application management services to its IMS customers. HCL's ALT ASM offering focuses on a ruthless cut down of waste in application support and maintenance, and is said to be seeing significant traction.
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\nThe division is now headed by Ajit Kumar, an Accenture veteran who came to HCL a year ago. In 2012, HCL brought Prithvi Shergill from Accenture to head HR. These are signs that the company is trying to combine international best practices with India's outsourcing advantage. For now, the strategy looks to be working perfectly.\n\n<\/body>","next_sibling":[{"msid":40257464,"title":"After IT, Wipro's Azim Premji & Infosys' Narayana Murthy squaring off in $3-bn e-commerce market","entity_type":"ARTICLE","link":"\/news\/industry\/after-it-wipros-azim-premji-infosys-narayana-murthy-squaring-off-in-3-bn-e-commerce-market\/40257464","category_name":null,"category_name_seo":"industry"}],"related_content":[],"msid":40257680,"entity_type":"ARTICLE","title":"HCL Tech is IT's stock market star with a growth rate of 64%","synopsis":"Its revenue growth has been consistently high, and above the industry average growth. But what's been remarkable has been net profit growth.","titleseo":"industry\/hcl-tech-is-its-stock-market-star-with-a-growth-rate-of-64","status":"ACTIVE","authors":[{"author_name":"Shilpa Phadnis","author_link":"\/author\/479212770\/shilpa-phadnis","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/479212770.cms?width=100&height=100&hostid=268","author_additional":{"thumbsize":true,"msid":479212770,"author_name":"Shilpa Phadnis","author_seo_name":"Shilpa-Phadnis","designation":"Principal Correspondent","agency":false}},{"author_name":"Sujit John","author_link":"\/author\/7660\/sujit-john","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/7660.cms?width=100&height=100&hostid=268","author_additional":{"thumbsize":true,"msid":7660,"author_name":"Sujit John","author_seo_name":"Sujit-John","designation":"Editor","agency":false}}],"Alttitle":{"minfo":""},"artag":"TNN","artdate":"2014-08-14 13:26:06","lastupd":"2014-08-14 13:28:42","breadcrumbTags":["industry","Infosys","Wipro","IBM","HP","Dell","Pepsi","Networks","M&A","Business Partnership"],"secinfo":{"seolocation":"industry\/hcl-tech-is-its-stock-market-star-with-a-growth-rate-of-64"}}" data-authors="[" shilpa phadnis","sujit john"]" data-category-name="Industry" data-category_id="18" data-date="2014-08-14" data-index="article_1">
班加罗尔:大型印度IT公司,HCL科技公司已经无可争议的明星近年来股票市场。最小的前五名,倾向于获得最公众的注意力——失色TCS和认识到强劲的表现。但50亿美元,Shiv Nadar-promoted公司的崛起已经成为了一种现象。在过去的三年中,其股价已上涨249%。相比之下,TCS和上升了139%印孚瑟斯表现最差的,仅为34%。HCL的差距和其他同样重要的在过去的一年。HCL上涨64%,TCS和认识到增长35%左右;印孚瑟斯又一次落后在15%。
有充分的理由。其收入增长一直居高不下,以上行业平均增长。但显著的净利润增长42%、50.5%和30.9%在过去的三年里,以美元计算(Infosys的各自的数据分别为1.5%、0.5%和14.5%)。
公司的营业利润率——最好的措施之一的一个公司的操作的效率——曾经是14%三年前,当印孚瑟斯”是接近30%。在过去的季度,24.2%,只是一个影子背后印孚瑟斯的25.1%。在过去的一年中,它提高了营业利润率近4.5。
投资者使用一个测量称为价格收益比率(PE)来评估一个公司的股票价格的相对吸引力。这是一个估值多个反映收入/利润增长,这种增长的可预测性。印孚瑟斯和Wipro传统上有更优越的体育比,但Pramod Gubbi,经纪公司范围的销售总监,说他预计HCL科技公司的市盈率跨越Infosys和Wipro的未来四个季度。换句话说,投资者将愿意支付更高的价格为美元的HCL收益,比一美元的Infosys和Wipro收益。
Varun Vijayan,经纪公司PhillipCapital,分析师指出,HCL科技公司的表现一直好于同行,扩大利润和提高运营现金流在过去的两年里。“他们已经关闭了价值50亿美元的交易在过去两年金融,和大量来自新客户和扩大工作范围的服务,”他说。
HCL发现其在一个叫做罐金子(IMS)基础设施管理服务。之前认可——大多数印度同行——这是一个空间成熟大型外包,还有一个印度供应商可能出价高于全球玩家IBM和惠普。IMS涉及的管理整个公司的IT基础设施,包括设备、数据、相关政策和流程——一个没有核心,大多数公司和越来越重要的部分。
在过去的几年中,IMS HCL已发展非常迅速,许多合同的那些以前由全球IT专业处理。HCL科技公司首席执行官最近Anant Gupta告诉本报,一大原因就是,HCL没有既得利益的空间。“与我们的一些全球竞争对手(阅读IBM、惠普、戴尔),我们没有出售服务器、存储或网络给客户,所以客户有信心我们会给他们最好的选择,”他说。
增长空间的速度放慢一点,但它仍然是赢得大合同。仅在过去的几个月里,它赢得了一份价值5亿美元的合同百事可乐从DNB银行价值4亿美元的合同,挪威和阿尔卡特-朗讯(alcatel - lucent)价值4亿美元的合同。
Gubbi HCL还说前几个步骤同行在IMS销售和交付能力和IMS仍有很大的增长空间。Dipen Shah科塔克证券的私人客户群体研究,然而指出,HCL科技的增长从下文服务已经在过去两个季度放缓而Wipro正显示出一些良好势头的交易获胜。“我们看到对比趋势对这两名球员。虽然私募股权的估值Wipro和HCL有些相似,我们将需要至少2 - 3季度的行动取得成功,”他说。
盐酸Gubbi也是印象深刻的创新方法对相对商品化的服务线,如应用程序支持和维护,并表示它能够为其IMS客户交叉销售应用管理服务。HCL的ALT ASM提供侧重于无情的浪费减少应用程序支持和维护,而且据说看到重要的牵引。
部门现在由Ajit Kumar埃森哲老兵来到HCL一年前。2012年,“普里特维”系统的HCL将Shergill从埃森哲人力资源。有迹象表明该公司正试图将国际最佳实践与印度的外包的优势。现在,战略看起来是完美的工作。
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