Beating analyst expectations, the country?s fourth largest software exporter HCL Technologies posted a better-than-expected 33% increase in net profit for the third quarter ended March 31, 2011. Net profit for the quarter stood at R468.2 crore and crossed the $100 million (R440 crore) per quarter milestone. HCL Tech had posted R350.3 crore net profit in the corresponding quarter last year.
?HCL Technologies? results are above our estimates. The revenue growth as well as the improvement in margins were higher than our expectations. The stock is available at a discount to the larger peers and consistent performance in the future may provide decent upside to the stock price,? said Dipen Shah, senior vice-president (private client group research), Kotak Securities.
In fact, HCL Technologies’ stock closed at its 11-year high at R522.85, up 9.93% on the BSE. Revenues at R4,138.2 crore were up 31.5% compared with R3,132.1 crore posted in the quarter a year ago. In fact, company revenues in the last 12 months exceeded R15,000 crore with 58 new customers being added during this period.
HCL signed 11 transformational deals in the quarter. The IT major also bought certain software assets from Citibank International during the quarter for $26 million, revenues from which are expected to come from the middle of its fourth quarter this year. Through the deal, HCL is also taking over 41 employees from Citi and an ?assured revenue stream? of $135 million spread over 10 years.
?We continue to expand market share backed by a second sequential quarter of revenue growth of 30% plus year-on-year along with expansion in margins. HCL?s focus on forward investment in key markets and transformation services is paying rich dividends,? said Vineet Nayar, vice-chairman and CEO, HCL Technologies. On a sequential basis, the company?s net profit rose 17.1% from R399.7 crore registered in the previous quarter while the revenues were up 6.4% from R3,888.4 crore posted in the second quarter ended December 31, 2010.
Geography-wise, Americas contributed 54.3% to the total revenues with Europe following at 27%. Among the verticals, manufacturing?s share was largest at 27.3% with financial services closely following at 26.2%. Among the service offerings, custom applications led with 32% while business process outsourcing posted a loss of $5 million in the quarter as compared with $7 million.
Nayyar added that the company expects smaller transformation deals as against the total IT outsourcing deals for the next three months.
Net employee addition for HCL Tech stood at 1,153 for the period, taking the total headcount to 73,420.