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HCL Technologies' June quarter revenues met market expectations, with a 3.2 per cent sequential growth in dollar terms. However, lower than expected margins, disappointed the market. The stock of HCL Technologies lost 5.5 per cent on Monday post its results announcement.
The revenue growth came in higher than its peers such as Wipro and Tech Mahindra, but was marginally lower than the growth reported by TCS in the June quarter.
In constant current terms, revenue growth was 2.9 per cent, higher than the 2.7 per cent recorded in the March quarter.
Revenue growth was led by better traction in retail and consumer and life sciences and healthcare verticals. The US markets showed a sequential revenue growth of 5.1 per cent (in constant currency) , higher than the modest 0.2 per cent in the March quarter. This was stronger than the growth of 4.4 per cent that TCS reported from its US geography. Revenue from business process services grew by four per cent lower than the robust 7.9 per cent growth in the March quarter. But revenues from IMS and Enterprise System Integration recorded a strong growth of 5.2 per cent and 4.6 per cent respectively.
The company added one client in the $40 million plus bucket and two clients in $30 million plus bucket. Share of revenues from new clients was 7.1 per cent, up from 5.8 per cent in the March quarter and 3.6 per cent in the same quarter last year showing a number of new deal wins.
Attrition rate was 16.5 per cent, marginally higher than the March quarter, but lower than the 16.9 per cent reported in the June quarter last year. However, utilisation (including trainees) improved to 83.5 per cent, from 81.9 per cent in the March quarter.
For the full year 2014-15, the company’s revenue growth in constant currency terms was 15.1 per cent.
Margins disappoint
Like its peers, HCL Tech too saw a drop in margins. However, over 100 basis points sequential fall in margins was disappointing. Operating margins came in at 21.48 per cent. Higher upfront costs on account new businesses has been one of the headwinds for margins. However, as revenues flow in from new deal wins and the company automates some of its processes, margins are likely to improve.
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