HCL Technologies stock riding high on revenue visibility

The performance of HCL Technologies stock has been outstanding over the past three months. The fourth largest IT exporter among those listed in India has given a better stock return than its larger peers such as TCS, Infosys and Wipro during the period.

HCL Tech's good show on the bourses is on account of a relatively better revenue visibility. Among the top locally listed IT players, HCL Tech was the only one to sketch a promising scenario for the near term. The rest were more or less cautious over slower project accretion and delay in decision making by clients.

HCL Tech has shown faster growth in revenues too. HCL Tech's revenue grew faster than its three larger peers in four out of seven quarters on year-on-year basis. This was driven largely by the focus on multi-year projects related to enterprise applications and infrastructure management.

The acquisition of Axon in 2008 has given an edge to HCL Tech in the enterprise solutions segment. In addition, the company had been aggressively hiring experienced employees, during the slack period of 2009 when other players were focusing on fresh headcount.

The strategy helped HCL Tech to rapidly expand its deal base in subsequent quarters, which reported a pick up in outsourcing demand. It has reported a three-fold jump in the number of client accounts with more than $100 million annual billing over the past two years.

HCL Tech's performance is likely to stay positive in the coming quarters too.

Its BPO unit is likely to start posting profit from the March 2012 quarter.