HCL Tech Q2 profit up 0.8%, FY18 dollar revenue guidance raised to 12.1-14.1%

Software firm HCL Technologies on Wednesday said the second quarter (July-September) consolidated profit grew 0.8 percent sequentially to Rs 2,188 crore and has raised its full year dollar revenue guidance but retained constant currency revenue guidance.

Consolidated rupee revenue and dollar revenue during the quarter increased 2.3 percent each quarter-on-quarter to Rs 12,434 crore and USD 1,928 million.

The IT services provider has maintained its full year constant currency revenue growth guidance at 10.5-12.5 percent and EBIT margin guidance at 19.5-20.5 percent, but has raised full year dollar revenue guidance to 12.1-14.1 percent from 11.3-13.3 percent earlier.

EBIT (earnings before interest and tax) grew by 0.3 percent to Rs 2,451 crore but margin contracted 40 basis points to 19.7 percent compared with previous quarter.

Earnings barring bottomline missed analysts’ expectations. Profit was estimated at Rs 2,143 crore on revenue at Rs 12,572 crore and dollar revenue was expected at USD 1,951 million while EBIT was estimated at Rs 2,489.3 crore with margin at 19.8 percent for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

HCL Technologies said attrition in IT services (last twelve months) during the quarter stood at 15.7 percent, lower from 16.2 percent seen in previous quarter.

Attrition of business services segment also declined to 6.3 percent from 6.7 percent on sequential basis, it added.

Blended utilisation (including trainees) was unchanged at 86 percent for the quarter QoQ.

Strong client addition continued for the second quarter as it has added 24 clients in USD 5 million category, 11 in USD 10 million band, 2 clients in USD 20 million, 3 in USD 40 million, 5 in USD 50 million and 1 client in USD 100 million category.

"During the quarter, we signed 15 transformational deals, representing a well–balanced mix across geographies and Mode 1–2–3 services. The deal wins were led by the verticals of insurance, healthcare, telecommunications, public services, hitech and manufacturing," the company said.

HCL Technologies has announced dividend of Rs 2 per share, 59th consecutive quarter of dividend payout.

Majority of analysts expect the stock to open lower as earnings missed expectations.

Karan Taurani, VP - Research at Dolat Capital and Dipesh Mehta of SBICAP Securities expect the stock to fall in opening as it is fairly valued at current level.