Even though Infosys kicks off the earnings season every quarter with its numbers, thankfully its performance is no longer a benchmark for Indian IT companies. While Infosys continues to shock the market with its inconsistent performance, the performance of HCL Tech has become as predictable as Infosys was at one time. Not surprisingly, HCL Tech reported a healthy set of numbers on Wednesday, which beat market expectations on all counts. The company is signing new deals worth $1 billion every quarter, expanding revenue market share and increasing utilisation levels. And none of this is done by compromising on margins.
In dollar terms, revenues grew by 3.2 sequentially, led by a strong 8.6 per cent growth in infrastructure managed services (IMS). After increasing margins steadily in the last four quarters, the company managed to hold its EBIT margin at 19.9 per cent in the fourth quarter. According to Emkay Global, EBITDA margins declined by 20 basis points sequentially to 22 per cent versus expectations of 100 basis points sequential decline, which is better than estimates. The company managed its margin profile by cutting back marginally on sales and marketing expenses.
HCL Tech won $1 billion-plus multi-year deals in the March quarter too, maintaining its sustained momentum of signing deals with a total contract value of $1 billion. Strong results from HCL Tech shrug off any concerns regarding the health of Indian IT industry which were raised because of weak performance by Infosys. Ankita Somani of Angel Broking, says: “HCL Tech, with end-to-end IT capabilities and a strong client mining ability, is clearly emerging as a front runner and outperforming many of its peers companies.” However, the fact that employee headcount has fallen sequentially, while revenue growth was boosted by higher utilisation levels.
