India’s fourth largest IT services exporter HCL Technologies missed Street estimates, reporting a net profit of $264 million, down 5.4% sequentially for the September quarter, weighed down by cross-currency volatility and client specific issues.
The revenue at the end of the quarter stood at $1.54 billion registering an almost flattish sequential growth of 0.5%, the company announced on Monday. However, the stock price of HCL Technologies showed a gain of 1.88% on Monday on the BSE to end at Rs 857.15. Earlier this month, HCL had given a profit warning and a forecast of tepid revenue growth for the fiscal.
HCL Technologies managed to marginally improve the operating profit margins (OPM) at the end of September quarter to 21.9% as compared to 21.3% in the comparable sequential period. The IT major bagged 10 transformational engagements during this quarter in excess of $1 billion in total contract value. The firm said that there was broad based growth across all revenue segments driven by the segments of engineering & R&D, business services and infrastructure. However the infrastructure management services (IMS) vertical showed certain weakness during the quarter.
Commenting on the results, HCL Technologies president & CEO Anant Gupta said, “We have started FY16 on a strong footing with LTM revenue growth of 15% Y-o-Y in constant currency. Our investments in BEYONDigital, Next-Gen ITO and IoT offerings is reflected in our healthy bookings and deal pipeline and continues to demonstrate our ability to incubate blue ocean ideas and build them to be market leaders.”
The net profit in rupee terms stood at Rs1,726 crore which was a decline of 3.2% on a sequential basis while revenue grew 3.3% to reach Rs10,097 crore. It is for the first time that quarterly revenue of HCL Technologies crossed Rs 10,000 crore.
The total employee headcount of HCL Technologies at the end of September quarter stood at 105,571, which is down 536 when compared to the sequential three month period. The attrition rate was marginally down to 16.3% when compared to the previous quarter.
Commenting on the performance of HCL Technologies, Dipen Shah, head of private client Group Research, Kotak Securities said, “HCLT’s results were lower than expectations. Infrastructure management services (IMS), the growth driver for HCLT revenues, reported a 0.9% growth in constant currency terms. We maintain that, the competition in IMS market is set to intensify with several players now focusing more on this segment. The margins reflect profitability challenges faced by HCLT in a bid to sustain high growth. We have been cautious on the profitability levels of HCLT. We will watch out for the improvement in growth rates in future quarters.”
HCL Tech to acquire Bengaluru’s C2SiS
HCL Technologies has announced that it has signed a definitive agreement to acquire a Bengaluru-based privately held engineering services firm, Concept to Silicon Systems (C2SiS). C2SiS specialises in system-on-chip and system design services and HCL plans to leverage this expertise to make a further foray into the semiconductor industry.