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HCL Technologies has managed to beat market expectations by delivering strong growth on the revenue front as well as improvements in its key verticals and service lines.
The icing came in the form of healthy growth in profits as well. In the March quarter, HCL saw revenues expand by 6.4 per cent sequentially to Rs 4,138.2 crore, while net profits grew by a substantial 17.1 per cent to Rs 468.2 crore.
On both these parameters, the company has surpassed the growth rates managed by Infosys.
The profit growth may have aided by the fact that forex losses have been coming down substantially over the last 3-4 quarters as has been the stabilising of losses in its BPO division.
Key numbers improve
The company's key verticals - BFSI and manufacturing, which together account for around 54 percent of overall revenues, have grown at 12.7 per cent and 6.6 per cent sequentially. Other verticals such as telecom and retail though have grown just marginally.
HCL has seen its low-billed custom application services as well as higher billed enterprise offerings grow at over 6 per cent suggesting increasing IT spends by clients and also a revival in discretionary budgets. Infrastructure service, an area where the company is ahead of peers, too has grown at a healthy 8.6 per cent.
In terms of geographies, while North America has been flat, Europe and Asia witnessed substantial traction - a trend that was seen in Infosys' results as well.
Client additions have been healthy with as many as 11 being added in the $20-50 million category. HCL Tech's top clients too have grown at a reasonable pace.
Volume growth, at 4.8 per cent, has been robust and it comes on the back of enhanced utilisation rates of 76.3 percent. Realisations too improved by a percent for HCL. The net margin improvement of a percentage point to 11.3 per cent may be attributable to optimised cost structuring due to increased execution of projects from offshore. The fact that forex losses were just a little over Rs 11 crore, which is less than a fifth of what it was last year, too limited profit erosion. Attrition, at 17 per cent, though still remains a point of concern.
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