HCL Tech profit up 3.6% in Q3

HCL Technologies has reported a consolidated net profit of ₹1,683 crore during the third quarter ended March 31, up 3.6 per cent against ₹1,624 crore in the corresponding period last year.

Led by geographical growth in both Europe and the US, and vertical growth such as in financial, public services, and retail and consumer packaged goods, the company’s revenue also grew year-on-year.

The company’s revenue rose 11 per cent annually to ₹9,267 crore during the quarter against ₹8,349 crore during January-March 2014. The company follows July-June as its fiscal year.

“This quarter saw our revenue increase by 14.4 per cent year-on-year in constant currency and we gained significant market share fuelled by transformational deal bookings (14 deals) in excess of $1 billion. These engagements were primarily driven from industries like consumer services, manufacturing and public services and the European region,” Anant Gupta, President and Chief Executive Officer, HCL Technologies, said.

However, the results are not as per street estimations and analysts said the currency volatility led to drop in margins on sequential basis.

During the quarter, the company also reported a foreign exchange loss of ₹142 crore as against a forex gain of ₹15 crore in the previous quarter, which also adversely impacted the net profit. The currency impact on the revenues was about 270 basis points or 2.7 per cent.

“The revenue came in at - 0.2 per cent quarter on quarter to ₹8,349 crore versus ₹9,376 crore expected. EBITDA margins came in at 22.5 per cent versus 25 per cent expected, a dip of 250 basis points quarter-on-quarter,” Sarabjit Kour Nangra, Vice-President (Research – IT) at Angel Broking, said.

However, on the business front, strong client addition in the quarter continued, she said adding that the attrition rate during the quarter inched up to 8.3 per cent against 6.7 per cent in second quarter.

Number of employees grew during the third quarter to 1,04,184 compared with 90,190.

All in all, the results are a mixed bag, said Sanchit Vir Gogia, Chief Analyst and CEO at Greyhound Research, said.

“While on the positive side, the overt reliance on infrastructure management services is slowly expected to reduce over time, and increasing exposure to Europe is a worry since the geo remains volatile. This has been a tough quarter for nearly everyone in the industry,” he said.

Shares of HCL Technologies closed at ₹891.05 on the BSE on Tuesday, down 3.48 per cent from previous close.

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