Balanced growth across segments for HCL

K.Venkatasubramanian BL Research Bureau | Updated on November 17, 2017 Published on October 17, 2012

Outpaces Infosys in key indicators

HCL Technologies has outpaced Infosys, again. In terms of growth in key financials as well as several important performance indicators, HCL has come out on top in the September quarter.

Better volume growth, large-client additions and significant growth across segments – more importantly in the BFSI vertical – have helped the company’s numbers.

The revenues for the quarter grew by 2.9 per cent sequentially to Rs 6,091 crore, while net profit expanded 3.6 per cent to Rs 885 crore. In dollar terms, the growth figures for revenues and profits were 3.2 per cent and 3.9 per cent, respectively. On both these counts, HCL has done better than its larger peer.

Volume (person months billed) growth was 4.5 per cent, which too was higher than Infosys’ 3.8 per cent, suggesting better traction with clients.

Key parameters strong

During the quarter, there were four new clients added in the $30 million-plus category. There was no decline in large-sized clients ($100 million-plus) as was the case with Infosys.

In addition, HCL’s top 10 clients grew, though at a pace slightly lower than the overall company’s revenue rate.

The key BFSI segment grew at a healthy 4.1 per cent sequentially, while other verticals such as healthcare, retail and media grew at a much faster pace. This makes the growth balanced and also sets aside concerns about a slowdown in the spending of clients in the BFSI segment. Infosys had witnessed just a marginal growth in the BFSI vertical.

HCL has also experienced a steady increase in the proportion (51.2 per cent of revenues currently) of fixed price projects over the past several quarters. Fixed price projects deliver better realisations than time and material contracts. Consequently, the company’s margins continue to increase.

Infrastructure services, in which the company is the top player among peers, continue to grow at double digits. The company’s BPO segment, a drag on margins earlier, has grown significantly and is now profitable at the EBIT level.

The September quarter numbers reiterate the perception that competition in growth is largely between HCL and TCS, with both expanding at a pace that is much faster than peers such as Wipro and Infosys.

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Published on October 17, 2012
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