The Hindu Business Line : HCL Tech Q3 net revenue up; US biz healthy

‘In sweet spot’: Mr Shiv Nadar (right), Chairman and Chief Strategy Officer, HCL Technologies Ltd, and Mr Vineet Nayar, CEO, at a press conference, in the Capital on Tuesday. –

Our Bureau

New Delhi, April 15 India’s fifth largest software exporter HCL Technologies on Tuesday posted a 3.2 per cent year-on-year rise in its third quarter net income at Rs 342.5 crore on a consolidated basis, even as the company clinched better-than-expected growth in the US market.

In rupee terms, the revenue at Rs 1,944.8 crore was up 23.3 per cent year-on-year and 7.1 per cent on a sequential basis.

The net profit was impacted by foreign exchange losses worth Rs 27.1 crore, compared with a gain of Rs 41.8 crore a year back, and a gain of Rs 5.8 crore during the second quarter ended December 2007.

Forex loss notional

The company said that the forex loss is notional as it is ‘marked to market’.

In dollar terms, the net income rose 12 per cent year-on-year and 1.1 per cent sequentially to $85.4 million in Q3; while the revenue rose 33.8 per cent on the year, to $484.9 million.

During the quarter, HCL inked contracts worth $500 million spread across five deals covering telecom, financial services, hi-tech verticals, and the US, Europe and Australia geographies.

Sticking to guidance

The company said it is sticking to the guidance for 35 per cent revenue growth for the current fiscal ending June 30, 2008, and 30 per cent EBITA growth, thus allaying fears of an impact on the company on account of US slowdown.

During the quarter ended March 2008, the share of the US geography rose to 55.9 per cent, compared to 54.3 per cent a year-ago, and 55 per cent in the previous quarter.

“The US is growing at 8.4 per cent compounded quarterly growth rate (last four quarters). The US geography seems to be finding HCL attractive. While we have a policy of diversifying our markets, we will also not refuse orders. Perhaps because of the threat of recession, customers are being more open to outsourcing. We are suddenly finding ourselves in a sweet-spot,” Mr Vineet Nayar, CEO of HCL Technologies, said at a press conference.

However, two customers in the BFSI domain have decided to freeze the budget at last year’s levels.

HCL’s quarterly EDITDA margins rose to 22.3 per cent from 21.4 per cent in the second quarter ended December 31,2007, but lower than 23.3 per cent a year ago.

Operating margins up

Higher realisations, higher utilisations and slightly better pricing helped expand operating margins (on the quarter), the Executive Vice-President (Finance), Mr Anil Chanana, said.

“The company signed some deals at a better billing rate while some others were at flat rates,” Mr Nayar said.

The company added 1,848 staff on a net basis during the quarter.

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