HDFC Securities has retained 'Buy' on HCL Technologies with target price of Rs 1,628 with current market price (CMP) of Rs 1,425 in its report.

Commenting on the result, the stock broker said, ''HCL Tech reported robust results for 3QFY14 with a steep beat on EBIDTA margin. PAT was 6% ahead of our estimates aided by margin beat.

HCL Tech's EBIDTA margin expansion has been the strongest among Tier 1 IT vendors. Company registered a whooping 830bps EBIDTA margin improvement over a span of eight quarters (26.7% as on 3QFY14 vs. 18.4% in 3QFY12).

HCL Tech has narrowed its EBIDTA margin differential with peers. HCL Tech's 3Q EBIDTA margins are 430bps/160bps lower than that of TCS and Infosys respectively.

However, we see margin headwinds in FY15 as company guided for increased investments in sales and marketing. HCL Tech currently trades at 28% discount to TCS. We increase our target price by 4% to Rs 1,628/sh (14.5x FY16E) owing to EPS upgrade. Retain Buy.''

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