IT services major HCL Technologies on Wednesday reported an 8.2 per cent fall in consolidated net profit to Rs 2,230 crore for the June quarter, and said it was "cautiously optimistic" about growth in the ongoing fiscal.
HCL Technologies' net profit stood at Rs 2,431 crore in the year-ago period, as per the Indian Accounting Standards (Ind-AS). Its revenue from operations rose 18.3 per cent to Rs 16,427 crore in the June quarter from Rs 13,878 crore a year ago.
The company has maintained its forecast of FY2020 revenue growth to be between 14-16 per cent in constant currency terms.
"We have started FY'20 on a very, very strong note with continued revenue momentum. We posted double-digit quarterly year-on-year growth of 17 per cent in constant currency...In terms of incremental revenue added, it comes close to USD 100 million, which is the highest-ever incremental revenue that we have produced," HCL Technologies President and CEO C Vijayakumar told reporters.
HCL Technologies' performance in the June quarter continues to be better than that of rival Wipro that clocked 8.9 per cent rise in revenue from operations to Rs 15,006.3 crore in the June 2019 quarter.
Larger rivals Tata Consultancy Services and Infosys logged a revenue growth of 11.4 per cent (to Rs 38,172 crore) and 14 per cent (to Rs 21,803 crore), respectively.
Pointing to the lower EBIT (earnings before interest and tax), he said the "muted performance" is in line with the investments that the company was making "to ensure that the future growth momentum is maintained".
In December last year, HCL Technologies had inked an agreement to acquire select IBM software products for Rs 12,252 crore (about USD 1.8 billion), including earnouts of Rs 1,035 crore (USD 150 million). The company closed the deal on June 30, 2019.
Also, in March this year, HCL announced the acquisition of US-based Strong-Bridge LLC for USD 45 million.
"Revenue (from the IBM deal) flows in from July-September quarter. For the full year, revenue is expected to be about USD 625 million... which comes to about USD 150 million (a quarter) but there is seasonality to that with December being the highest quarter," HCL Technologies CFO Prateek Aggarwal explained.
According to a regulatory filing, HCL Technologies has paid Rs 5,608 crore (USD 812.5 millions) till June 30 and balance amount including fair value of earnouts is payable in trenches till July 30, 2021.
"Looking forward, the macro environment remains a bit volatile in the light of the interest rates and some of the tariff situations that we're seeing and reading all the time. We remain positive on the trajectory of the technology spend. We continue to make strategic investments so that we are continuing to grow, deliver an industry leading growth...on an ongoing basis," Vijayakumar said.
He said the company expects its revenues to grow 14-16 per cent on the back of large deals and strong performance seen in the first quarter. The company closed about 12 transformational deals across verticals and geographies during the June quarter.
"If we look at our run rate, we would already exceed the guidance... however, we are a little bit cautious because there's so many things happening in the world which can impact some clients and which could have some further impact on some business coming slowly for us. So we are remaining cautiously optimistic," he said.
The numbers were declared after the close of trading hours. Shares of the company closed marginally lower at Rs 1,022.30 on the BSE.
"HCL Tech delivered a mixed performance with revenue beat offset by EBIT margin miss. Organic revenue growth is better-than-expected...Despite delay in closure in IBM deal, the company has retained the revenue growth guidance in FY2020E, which implies the acceleration in organic growth," Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, said.
In dollar terms, the net profit fell 10.1 per cent to USD 319.7 million for the June 2019 quarter, while revenue surged by 15 per cent to USD 2.36 billion as compared to the year-ago period, as per the US Generally Accepted Accounting Principles (GAAP).
HCL Technologies Board has declared a dividend of Rs 2 per share.
The company added 16,332 people (gross) and 5,935 staff (net) during the quarter to take its total head count to 1,43,900 at the end of the June 2019 quarter.
Attrition in the IT services business on the past 12-month basis stood at 17.3 per cent.
The company has hiked salaries for employees from July onwards. Onsite employees have received wage hikes to the tune of 2-3 per cent, while those offshore have seen an increase of 6-7 per cent in their salaries.
HCL Technologies said it has hired about over 4,000 people onsite with a majority being hired for the US market.
The board has appointed Mohan Chellappa (President, Global Ventures at Johns Hopkins Medicine International) as an independent director for a period of five years. With the addition, the board strength has increased to 11 directors, including nine independent directors.
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