HCL Tech bucks trend, Q4 profit jumps 134%

Written by fe Bureaus | New Delhi | Updated: Aug 27 2009, 04:06am hrs
Riding on revenues from $1.5 billion worth of contracts won over the past nine months and lower forex losses, HCL Technologies, the country's fifth-largest software firm, on Tuesday bucked the industry trend to report robust growth numbers for the fourth quarter and full year ending June 2009.

HCL reported a 134.1% increase in net profit for the fourth quarter ending June of the financial year 2008-09, compared to the same period last year at Rs 330 crore.HCL follows theJune to July financial year.

The companys net profit was up 51.3%, sequentially due to the lower forex losses this quarter, which stood at Rs 88.6 crore on back of rupees rise against the dollar. In the third quarter ending March, HCL had suffered a forex loss of Rs 201.3 crore.

The companys revenues for the quarter were up 34.7% year-on-year at Rs 2,908 crore, an increase of 1.6% sequentially. Vineet Nayar, CEO of HCL Technologies, said the growth has come solely from revenue flow from past deals as the market situation remains challenging and he continues to be pessimistic about the market environment.

"Though HCLdoesn'tprovide a future outlook, going by an analysis of the performance of S&P 500 companies, we expect signs of recovery only by the next calendar year and not before," said Nayar.

For the full year ending June, the companys net profit rose by 13.6% at Rs 1,278 crore and its revenues stood at Rs 10,591 crore, an increase of 40%. At the end of the year, the companys head count stood at 54,216 employees, with net addition of 3,475 people.

However, during the quarter, HCL made a net addition of only 190 employees. Nayar said in the last financial year, of the total 15,000 people recruited, 3,500 were in the US and Europe. "We will continue to hire and invest locally in the future," he said.

The companys EBIT margin was at 18% during the quarter, an increase of 160 basis points sequentially. Anil Chanana, CFO of HCL Tech, said this is due to the increased utilisation and lesser SG&A spends. Chanana said of the $585 million of loan taken to finance its acquisition of Axon, the company has already repaid $85 million to Standard Chartered Bank.

"For the remaining $500 million, we have tied-up refinancing through foreign currency loan of $300 million and have taken $200 million worth of domestic bonds," he said. However, he refused to divulge more details of the refinancing. HCL has also completed the acquisition of Axon.