Insitutional Buys Crank Up Hcl Tech

The shares of HCL Technologies surged for the second day in a row on institutional and fund buying. The software company's stock closed 2.65 per cent higher at Rs 317.25, after reaching its intra-day high of Rs 323.95 on the Bombay Stock Exchange.

"Funds and institutional investors benchmarking their portfolios to the Sensex were seen buying the stock on consecutive second day of its induction in the Sensex," dealers said. HCLT rose 3.8 per cent to Rs 309.05 Monday. With today's rise, it has gained 6.80 per cent in two sessions following its inclusion in the Sensex.

HCLT, last year, acquired a controlling 51 per cent stake in Deutsche Software, a wholly-owned subsidiary of Deutsche Bank, for $25 million in cash. HCLT will acquire the remaining 49 per cent at the end of the third year by issuing HCLT shares to Deutsche Bank.

It recently announced a strategic alliance to provide contact centre services through the Apollo Contact Center operated by British Telecom at Belfast, Northern Ireland. This venture is expected to provide revenues of over $30 million (Rs 140 crore) over the next three years. The company expects Deutsche Software and other recently forged alliances to contribute about 5-6 per cent of the total turnover in the current year.

The US market contributes 71-74 per cent of the company's revenues. Asia-Pacific revenues total about 23 per cent and Japan contributes just 3 per cent. The company intends to increase the latter's share to 10 per cent in five years.

For FY 2002 (ending June 2002), the company has given a guidance of Rs 1,750 crore of consolidated revenues and a net profit of Rs 575 crore after providing Rs 25 crore as extraordinary expenses. The scrip trades at a PE multiple of 21 based on its trailing 12-month September 2001 earnings per share of Rs 14.60.