HCL Technologies Q3 profit jumps 59%, upbeat on deal pipeline

Written by PTI | New Delhi | Updated: Apr 18 2014, 14:42pm hrs
HCLHCL's results follow stronger-than-expected profits at Tata Consultancy Services, the No. 1 Indian IT services provider, and at No. 2 player Infosys.
Fourth-ranked IT services firm HCL Technologies today posted a 59 per cent jump in net profit to Rs 1,624 crore in the quarter ended March 31, driven by strong growth in infrastructure services and its financial and manufacturing verticals.

The Noida-based firm, which posted a profit of Rs 1,021 crore in the January-March quarter of 2012-13, said in a statement that revenue from infrastructure services grew 31.5 per cent year-on-year. HCL Technologies follows a July-June financial year.

Revenue in the quarter increased 29.8 per cent to Rs 8,349 crore from Rs 6,430 crore a year earlier, beating market expectations.

HCL Technologies' results follow better-than-expected earnings from Tata Consultancy Services, the No 1 Indian IT services provider, and No 2 player Infosys.

HCL Technologies shares opened over 3 per cent higher and closed at Rs 1,424, up 1.04 per cent on the BSE.

"This has been a good quarter for us and the operating metrics are tracking well. We are increasing our relevance for the customer, cross-selling solutions. The bookings were over USD 1 billion," HCL Technologies President and Chief Executive Officer Anant Gupta told reporters.

The application services business showed a robust performance, he added.

Though the company does not provide revenue forecasts, Gupta exuded confidence in aggressively winning deals, especially in the re-bid market.

"There is significant momentum in the re-bid market, it's a 120 billion opportunity. We are competing with large international firms and winning deals. In Q3 alone, we have signed 12 transformational deals. The deal pipeline continues to be robust and should give us good momentum," Gupta said.

TCS had also said demand would be stronger in 2014-15 as the global economy improves and clients increase technology spends, especially on new platforms such as cloud, mobility, social and analytics.

IT-BPO industry body Nasscom has projected the sector's export revenue to grow 13-15 per cent in the current financial year.

In dollar terms, HCL Technologies' net profit grew 39.9 per cent to USD 264.2 million, while revenue rose 14.3 per cent to USD 1.36 billion in Q3 of FY14 from a year ago.

Sequentially, net profit climbed 8.5 per cent from Rs 1,496 crore and revenue was up 2 per cent from Rs 8,184 crore in the October-December quarter.

The company announced an interim dividend of Rs 4 per equity share of face value of Rs 2.

During the quarter, HCL Technologies added 8,291 people (gross) and 1,858 (net) employees, taking the total head count to 90,190 as on March 31, 2014.

Gupta said while Europe continues to do well, the rest of the world (RoW) segment showed significant growth on the back of a large systems integration deal.

"RoW and Europe continue to grow. Americas was flat quarter-on-quarter but that is not a concern. The deal pipeline remains robust," he said.

The Americas market grew 11 per cent year-on-year, Europe 26 per cent and RoW 4 per cent.

The company added two clients each in the USD 50 million and USD 30 million categories.

Application services grew 3.7 per cent y-o-y, infrastructure 37.9 per cent, engineering and R&D services 6.9 per cent and business services 14.6 per cent.

"Our success with the industrialised delivery model, increasing number of contracts moving into steady state, savings on G&A (general and administrative expense) front, helped in improved net income margin of 19.4 per cent this quarter, up from 15.9 per cent in the corresponding quarter of last year," HCL Technologies Chief Financial Officer Anil Chanana said.

This provided the company more room for making relevant investments in a rapidly changing market landscape, he added.

The company's cash and cash equivalents stood at Rs 1,045.5 crore as of March 31.

Asked if HCL Technologies was looking at acquisitions, Gupta said the company continues to hunt for favourable prospects.

"We have said we will look for a geographical opening or specific competencies as we open our Digital SI strategy. We have invested in thought leadership and will continue to do so. We are investing for the long haul," he added.

HCL Technologies March qtr net profit up 59 pct, beats estimates

(Reuters) Indian IT services exporter HCL Technologies beat market expectations with a 59 percent rise in March-quarter profit, helped by increasing demand for outsourcing services.

Consolidated net income for the three months ended March 31 rose to 16.24 billion rupees from 10.2 billion rupees in the same period a year earlier, HCL Technologies said on Thursday.

That compares with the 15.51-billion-rupee average of 23 analyst estimates.

Revenue rose 30 percent to 83.49 billion rupees.

HCL's results follow stronger-than-expected profits at Tata Consultancy Services, the No. 1 Indian IT services provider, and at No. 2 player Infosys.

IT services providers are gearing up for stronger demand this year as an improving global economy encourages the sector's clients to boost spending on technology.

Exports by the country's IT outsourcing sector are expected to rise 13-15 percent in the current fiscal year that started this month, according to the National Association of Software and Services Companies, an industry lobby group.