Stock Review: Hinduja Global, Chennai Petroleum, HCL Infosystems

Hinduja Global

Hinduja Global is a solutions provider to the outsourcing industry. The company's business witnessed a turnaround during the September 2010 quarter. Its topline, which was more or less stagnant till the June 2010 quarter, surged 17% in the September 2010 quarter on account of the consolidation of its latest acquisition — Careline Services. The company collects 75% of its revenue in the US dollars, 13% in pounds and the balance 12% in rupees. Its domestic revenues continue to be 102.8cr impacted due to pricing pressure while the rupee appreciation has adversely affected its revenues from business international . It Tax k _{6 . 8} ;nd4o: follows a strategy Interest 7.4 Retained Earning 45.7 of shifting facilities to low-cost centres to improve profitability. Margins are likely to improve in the coming quarters as new centres at various cities have started to ramp up and the existing centres have yielded new businesses. The management expects a robust demand momentum in the coming quarters. With new facilities becoming operational, the company is likely to fare well. One can expect the company to pay dividend at the rate of 100% of its equity.

 

Chennai Petroleum

Chennai Petroleum Corporation (CPCL), a subsidiary of Indian Oil, is engaged in refining of petroleum with a dominant presence in South India. It has had a long track record of paying healthy dividends. Except for FY09, when it suffered losses due to volatile crude oil prices, the company has paid dividends since its incor-FY poration 10 its . dividend For [BIT: 711.5cr stood at 12 per share, which translates in yield of 5.7% at its current market price of 210. (Tax x wnteback writebad NA 

   In view of the Dividend 25.1 decline in its profits during the first Interest 19.4 Retained Earning 55.5 nine months of FY11, the company may not be able to maintain its dividend run-rate of the last year. However, considering its dividend payout of 33% during the past five dividend-paying years, the company is expected to pay dividend of 8 per share, resulting in a yield of 3.8%. Considering the company's low valuations and improving outlook for the refining industry, the scrip could also see some capital appreciation in the coming quarters.

 

HCL Infosystems

quarters since to business distribution telecom integration like due during However products The The be systems company to a the company a laggard the faster . continues , and past However it second . expects operates few is growth mainly 's half , to 4 in witness on of into the its lower fiscal distribution higher a margins margin Dividend year margin ending EBJT EBIT improvement business of 43 ^: : ² . businesses 1 ^- ) ³ 395 395 June %. ..99 of cr cr ^IT automated a recent 250 billing crore Interest Tax 129 28.3 Retained Earning 15.7 deal from BSNL takes its order backlog to 4,250 crore. Though HCL has been sustaining a huge order book size since June 2010 quarter, not much has got reflected in its topline during the subsequent quarters. The company expects system integration, office automation and digital entertainment businesses to drive growth in future. In the past five fiscals, the company has been consistently maintaining a healthy dividend payout of more than 300%. Considering this, it is expected to give at least 300% dividend this year as well.