HCL Technologies has posted a net profit of Rs 496.7 crore in the quarter ended September 30, a 50 per cent jump when compared with the year-ago period. The IT services firm, while announcing this on Tuesday, said the result was driven by an all-round growth across geographies and service lines.
The revenues of the Noida-based company, which follows a July-June fiscal cycle, stood in the quarter under review at Rs 4,651.3 crore — up 25.4 per cent from the corresponding quarter in the previous fiscal. In constant currency terms, the growth in revenues was at 5.1 per cent.
On a sequential basis (when compared with the previous quarter), the decade-old company’s net profit dipped by 2.7 per cent on account of wage hikes.
The numbers, however, failed to cheer the bourses with the scrips closing at Rs 401.15, down 8.58 per cent on the Bombay Stock Exchange.
Rohit Anand, an analyst at PINC Research, found it difficult to locate what triggered the fall despite an “okay” set of numbers. “But,” he said, a slower dollar revenue growth was a negative. Besides, a dip in enterprise applications and services, coupled with weak demand outlook, resulted in the fall.”
The quarterly numbers also evoked mixed reaction from analysts. “HCLT’s results were marginally below estimates,” Kotak Securities Head (Fundamental Research) Dipen Shah. “Volume growth was in line with estimates.”
The HCLT board has declared an interim dividend of Rs 4 per equity share of Rs 2 face value, which includes a ‘one-time special milestone dividend’ of Rs 2 per equity share of the company.
In the quarter under review, HCLT’s operating margin came down to 17.1 per cent from 18.5 percent reported in the previous quarter.The volume growth was 4.1 per cent in dollar terms. HCL Tech expects to clock an EBIT margin of 14 per cent on constant currency basis for FY12 that ends in June.
The HCL numbers comes after TCS announced its results yesterday, narrowly missing the estimates.
Both TCS and Infosys, the Indian competitors of HCL, had also cautioned about the risks from a volatile economic environment on the sector's performance.
HCL Technologies CEO Vineet Nayar said the company’s deal pipeline for the October-December quarter was “quite healthy”. He however said the IT budgets of the client’s would either remain static or would go down, resulting in vendor churn.
Citing a Technology Partners International report, Nayar said a number of deals were expected to come up for renewal and restructuring in the October-December quarter. The total size of such deals could be as large as $8 billion. “Overall, IT budgets have been down for some time; the economic environment looks bleak,” he said. “The activity is now around churn. Clients are looking to change their vendors to save cost. This throws up more opportunities for companies like us.”
The company’s cash and cash-equivalents stood at Rs 469.4 crore as of September 30.
The company signed 12 transformational deals this quarter, including with EMI Group, Norfolk Southern and a leading life sciences organisation. HCL has also lined up a capex plan of $230 million for its current fiscal year ending June.
