HCL, the country’s fourth-largest information technology services company, has continued its strong financial performance, beating the expectations on all parameters in the just-ended financial quarter.
It reported a better-than-expected 67.3 per cent rise in net profit, at Rs 854 crore , or the quarter ended June 30, compared with the same quarter a year before. Outflanking its larger peers, it reported a 37.7 per cent growth in revenue in the quarter over a year, at Rs 5,919 crore, backed by higher order bookings and new deal wins.
This is HCL Technologies’ fourth quarter, as the company follows a July-June reporting year. On a sequential quarter basis, net profit grew 41.8 per cent, while revenue grew 13.5 per cent.
“All our engines were firing for growth this quarter. A five-fold increase in the $100-million clients; a 31 per cent increase in revenues and 48 per cent rise in net income year-on-year establish that industry-leading growth can be achieved profitably,” said Vineet Nayar, vice-chairman and chief executive officer.
For the year ended June 30, it reported a 47.8 per cent jump in consolidated net profit at Rs 2,526 crore. Revenue increased 31.2 per cent in 2011-12 to Rs 21,031 crore. Annual revenue crossed the $4-billion mark in FY12.
“HCL Tech reported a strong set of results, beating the market as well as our expectations, on all fronts. The dollar revenues grew three per cent, in line with what TCS reported. HCL Tech, with end-to-end IT capabilities and a strong client mining ability, is clearly emerging as a frontrunner and outperforming many of its peer companies,” said Ankita Somani, research analyst– IT, Angel Broking.
During the reporting quarter, HCL signed eight multi-year, multi-million deals. In FY12, it won 52 such transformational deals.
| HOW HCL COMPARES WITH OTHER BIGGIES | |||||||||
| Net profit | Revenue | Ebit | |||||||
| Company | Q1 (Rs cr) | Growth (%)YoY | Growth (%) QoQ | Q1 (Rs cr) | Growth (%)YoY | Growth (%) QoQ | Q1 (Rs cr) | Growth (%)YoY | Growth (%) QoQ |
| TCS | 3,318 | 37.4 | 14.6 | 14,869 | 37.7 | 12.1 | 4,077 | 44.0 | 10.8 |
| Infosys | 2,289 | 32.9 | -1.2 | 9,616 | 28.5 | 8.6 | 2,693 | 38.0 | 1.7 |
| Wipro* | 1,580 | 18.0 | 6.6 | 8,314 | 30.0 | 9.5 | 1,744 | 24.0 | 10.8 |
| HCL Tech** | 854 | 67.3 | 41.8 | 5,192 | 37.7 | 13.5 | 1,148 | 72.6 | 40.4 |
| *PAT numbers for Wipro include consumer care and lighting divison; ** HCL Tech follows financial calendar July - June. The June ended quarter was Q4 for HCL. Source: Companies | |||||||||
According to analysts, the strategy to aggressively chase big contracts coming up for renewal helped it stay clear of the turmoil in the outsourcing sector. “HCL’s focus on the churn market has yielded record wins in the past few quarters and execution will likely lead to sustained growth rates in the foreseeable future,” said Dipen Shah, head of private client group research, Kotak Securities.
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Nayar said though there was a substantial reduction in the new budgets, “there is a 20 per cent increase in the restructuring contracts where HCL operates”.
HCL expanded its operating margin by about 360 basis points (bps) to 22 per cent from 18.4 per cent reported in the previous quarter. The favourable rupee movement helped the margins to improve by 200 bps.
Of the regions, Europe grew 7.1 per cent and the rest of the world grew by 6.9 per cent sequentially. The Americas grew by 2.7 per cent.
In terms of service offerings, HCL’s infrastructure services division registered 9.2 per cent quarter-on-quarter growth, followed by enterprise application services, which grew 4.8 per cent. Of the verticals, healthcare grew 22.9 per cent, energy-utilities and public sector grew 13.1 per cent, while financial services grew 5.2 per cent.
Cash and cash equivalents stood at Rs 667 crore as on June 30. The board of directors has recommended a final dividend of Rs 4 per equity share of Rs 2 each for the year ended June 30.
During the quarter, it added 1,855 employees (on a net basis), taking the total headcount to 84,319. Attrition was 14 per cent in April-June.
The stock price jumped 6.7 per cent on the Bombay Stock Exchange, to close at Rs 513.75 at the end of the day’s trading on Wednesday.