Slowdown in projects, customer decision cycles impacts business; stocks down 9.8% on BSE.
Information technology (IT) company HCL Infosystems on Thursday reported an 83 per cent drop in net profit at Rs 11.5 crore for the quarter ended June 30.
The computer-maker's systems integration business continued to be severely impacted by a slow down in projects and customer decision cycles, and indicated its system integration business may continue to be laggard in the coming quarters.
Following the outlook, shares of the company took a beating at the bourses. The stocks closed at Rs 67.55, down 9.8 per cent on the Bombay Stock Exchange.
Net sales dropped 18.4 per cent to Rs 2,615.4 crore for the reported quarter, against Rs 3,204.9 crore in the same quarter last year.
"As we had indicated last quarter, systems integration business continued to be severely impacted by the slow down in projects and customer decision cycles and that may continue over a few quarters," Chief Executive Officer Harsh Chitale said.
Also, considering the current environment, with likelihood that delay in projects may continue for some more time, there could be some additional cost impact on the projects business of the company, he said.
"We are reviewing the possible impact project-by-project and discussing it with customers and vendors," he said.
The company had a net profit of Rs 67.2 crore for the same period last year, HCL Infosystems said in a statement.
For the year ended June 30, the company's net profit stood at Rs 168.2 crore, down 31 per cent from Rs 242.4 crore in the last quarter.
"The economy at large has been going through a difficult phase with both enterprises and consumers being cautious in decision making and discretionary spends," HCL Infosystems' founder and chairman Ajai Chowdhry said.
IT sectors like system integration, IT product and services have been affected in the domestic markets by the slow government project execution and decision process, he said. The employee strength increased to 7,231 in 2011, from 6,731 in 2010.
