 "HCL Tech misses estimates, net dips")
HCL Technologies, India’s fourth largest information technology services company, on Monday reported a 7.9 per cent decline in its net profit at Rs 1,726 crore in the quarter ended September, against the same quarter last year. Net profit took a hit owing to a one-time provision of $18.4 million the company made for a particular client project during the quarter.
Revenue at Rs 10,097 crore grew 15.6 per cent against the same quarter in the previous year. On a sequential quarter basis, net profit was down 3.2 per cent, while revenues grew 3.3 per cent. In dollar terms, net profit at $264 million (including the provision) declined 14.2 per cent on year-on-year basis while on quarter-on-quarter basis it was down 5.4 per cent. Revenue grew 7.7 per cent at $1,545 million against the year-ago quarter, while on q-o-q basis it was nearly flat with a growth of 0.5 per cent.
HCL narrowly missed the consensus analysts’ estimates both in terms of revenues as well as profit, during the quarter. According a Bloomberg poll, analysts were expecting it to post a consolidated net profit of $271.8 million on a revenue of $1.55 billion. In rupee terms, net profit was estimated at Rs 1760 crore on net sales of Rs 10,066 crore. “HCL results were lower than expectations. The CC (constant currency) revenue growth of 1.2 per cent came in below estimates and was lower than the growth reported by Infosys and TCS,” said Dipen Shah, head of private client group research, Kotak Securities, in a post earnings note.
“IMS (Infrastructure Management Services), the growth driver for HCL revenue, reported a 0.9 per cent growth in CC terms. We maintain that, the competition in IMS market is set to intensify with several players now focusing more on this segment,” he added.
The company posted an operating margin of 19.4 per cent (after the adjustment), mostly in line with the expectations. The growth from North America was just 0.6 per cent in reported currency term, while Europe grew 4.8 per cent on sequential quarter basis.
HCL’s large industry peers, including Infosys and TCS, have posted strong growth from the US this quarter. Infosys reported a 6.1 per cent sequential growth in North America (in reported currency), while its q-o-q growth in Europe was 8.3 per cent. In terms of business units, the growth of IMS business which accounts for nearly a quarter of HCL’s overall revenue, was nearly flat with a sequential decline of 0.1 per cent in reported currency. Among the key business verticals, financial services grew by just 0.8 per cent whereas in the growth in manufacturing business was almost flat sequentially.
Interestingly, HCL reported a reduction in headcount in the September quarter against the previous quarter. Headcount at the end of September quarter stood at 105,571 against 106,107 as reported at the end of June quarter, even though the attrition in IT services business at 16.3 per cent was nearly the same as it was in the previous quarter.
Meanwhile, the company has said that it has signed a definitive agreement with Bengaluru-based privately-held engineering services firm ‘Concept to Silicon Systems’ (C2SiS) for an undisclosed sum.
“C2SiS today is empowering strategic change in a broad range of industries with its specialisation in system-on-chip and system design services and its client list includes Fortune 100 and Fortune 500 companies,” the company said.
