Buoyed by increased revenues from Europe and service lines like engineering and infrastructure, the country?s fourth largest information technology (IT) company HCL Technologies on Tuesday posted a 50% rise in net profit for the first quarter ended September 30. The net profit stood at R496.7 crore compared with R331.1 crore posted in the year ago period.
However, on a sequential basis the company?s net profit during the period declined 2.7% leading the company’s shares tank 8.5% on the BSE. The company attributed the sequential decline in profit to wage hikes. Sequential revenues, however rose 8.2% from R4,299 crore in the trailing quarter.
HCL Tech is the third large IT company to have reported its quarterly results in the last one week and is facing pricing pressures due to an uncertain macroeconomic environment like its peers Tata Consultancy Services which posted lower than expected results and Infosys, which cut its dollar guidance. Besides, HCL Tech also posted a R17.9-crore foreign exchange loss in the quarter.
The firm?s revenue in the quarter stood at R4,651.3 crore, up 25.4% from R3,708.1 crore in the corresponding quarter last year. HCL Tech follows July-June financial year and expects to clock 14% margin in the current fiscal.
?HCL?s results were marginally below estimates. Volume growth was in line with estimates. Margins were slightly lower than our expectations,? said Dipen Shah, head, fundamental research, Kotak Securities.
The firm added 3,474 employees in the quarter to take the total headcount to 80,520 and plans to create 10,000 new jobs outside India in the next five years. It has a capex plan of $230 million for the current fiscal year. ?We have doubled our quarterly revenues in just three years to record a billion dollar quarter despite the tough economic environment. In fact, for the first time the funnel is dominated by the non-US markets whose share has increased to 55% while that of the US has declined to 45%,? said Vineet Nayar, vice-chairman and CEO, HCL Technologies.
HCL?s BPO business which was suffering losses for last few quarters, is expected to break even in January 2012 and Nayar said that the business will not require further investments for a turn around. Further, HCL Technologies clocked $1 billion quarterly revenue mark and has offered a ?Milestone Share Programme? for all its employees wherein they will receive a minimum amount equivalent of 5 shares and a maximum amount equivalent of 10 shares based on years of tenure at HCL. The company has budgeted an amount of R25 crore for this initiative.
HCL signed 12 transformational deals this quarter and Nayar added that the company is looking at its biggest deal pipeline in the October-December quarter. Americas contributed 55.8% to HCL Tech?s revenues while Europe?s share stood at 26.6%. Vertical wise, manufacturing, retail and consumer packaged goods drove revenues while among the service lines, custom applications and infrastructure services grew fastest.