In line with the positive momentum set by larger peers, India’s fourth-largest information technology (IT) services provider, HCL Technologies, on Thursday reported a better-than-expected second quarter results, with its shares going up seven per cent intra-day.
HCL Tech’s net profit jumped 68.5 per cent to Rs 965 crore for the second quarter ended December 2012, compared with the corresponding quarter last year. The company follows a June-July financial year.
On a sequential basis, the profit was up nine per cent. Revenue for the October-December quarter stood at Rs 6,274 crore, up 19.6 per cent year-on-year and three per cent sequentially. The company reported a strong volume growth of three per cent, better than TCS’ 1.25 per cent and Infosys’ 1.5 per cent.
Anant Gupta, who on Thursday took over as the CEO of the company, said, “Growth this quarter was driven by infrastructure and financial services, both growing in excess of 10 per cent sequentially. Six large transformational deals have once again given us a $1-billion booking this quarter.”
| RISE OF TECH TITANS | |||
| HCL TECH | INFOSYS | TCS | |
| QoQ (%) | 3.0 | 5.7 | 2.9 |
| YoY (%) | 19.6 | 12.1 | 21.7 |
| PAT | |||
| Q3FY13* (Rs cr) | 965 | 2,369 | 3,552 |
| QoQ (%) | 9.0 | 0.0 | 1.1 |
| YoY (%) | 68.5 | -0.1 | 23.0 |
| EBIT | |||
| Q3FY13* (%) | 19.8 | 25.7 | 27.3 |
| REVENUE | |||
| Q3FY13* (Rs cr) | 6,274 | 10,424 | 16,070 |
| * For HCL Technologies, October-December is the second quarter. | |||
HCL has won 12 multi-year, multi-million dollar deals with Fortune500/Global 2000 corporations this quarter, six of which are large integrated engagements. A majority of these engagements are from Americas and Europe.
HCL Technologies continued to improve its margin performance during the quarter. Despite giving wage hikes, HCL Tech reported 40 basis points (bps) quarter or quarter (q-o-q) expansion in Ebitda margin at 22.6 per cent.
“HCL Tech is emerging as a front runner and outperforming many peers. Operating margin of this company has always been a concern and now the management’s focus to improve this has been paying off and despite giving wage hikes HCL Tech reported 40 bps q-o-q expansion in Ebitda margin at 22.6 per cent, which is commendable," said Ankita Somani, Research Analyst – IT, Angel Broking.
HCL saw growth across regions. Both Europe and Americas grew by 4.2 per cent and 3.4 per cent, respectively. Among the verticals, financial services grew at 10.1 per cent, energy, utilities and public services was up 4.7 per cent and media publishing and entertainment grew 4.2 per cent.
However, unlike peers TCS and Infosys that continued to add employees, HCL Tech’s headcount went down during the quarter.
The company added 5,136 employees (gross additions). However, attrition and exits pulled down the total headcount to 85,194, compared with 85,335 in the previous quarter.
However, some analysts are apprehensive whether the company will be able to maintain the growth momentum. “Operationally, the company is well positioned to capitalise on the growth opportunity. However, continuity of similar performance on the back of infrastructure segment looks difficult (muted IT volumes from the past many quarters) in such uncertain environment,” said Daljeet Kohli - head (research), IndiaNivesh Securities.
HCL Tech declared an interim dividend of Rs 2 per equity share of face value of Rs 2 each. This quarter, HCL completes 10 straight years of quarterly dividend payout. HCL Technologies’ shares touched a 52-week high at Rs 720.9 per share. It closed at Rs 703.30 per share on the Bombay Stock Exchange (BSE) on Thursday, up 4.3 per cent.
The $100 –billion Indian software industry kicked off the earning seasons on a positive note with both top IT outsources TCS and Infosys, announcing better than expected quarterly numbers. Eyes are now on third-ranked Wipro, which will report its earnings on Friday.
