HCL Tech surprises market with strong Q2; shares up 3%

Moneycontrol Bureau

HCL Technologies rose over 4 percent early Thursday to a 52-week high of Rs 709 on NSE after the company surprised the market with better-than-expected earnings for the December quarter, beating analyst estimates at the revenue and net profit levels. The company also promoted its operations chief Anant Gupta as President and CEO. HCL reported quarterly revenues of Rs 6,274 crore; up 19.6 percent year-on-year and 3 percent sequentially. A CNBC-TV18 poll had estimated revenues at Rs 6210 crore. Net profit was Rs 965 crore (poll estimated: Rs 830 crore), up 68.5 percent over last year and 9 percent more than the preceding quarter. Earnings before interest and taxes (EBIT) was Rs 1,244 crore, up 49.8 percent over last year, and up 5.3 percent quarter-on-quarter. Vice-chairman Vineet Nayar said the company's operating margins improved 400 basis points year-on-year to 19.8 percent and net margin improved for the fifth straight quarter to 15.4 percent. "Our growth this quarter was driven by infrastructure and financial services, both growing in excess of 10 percent sequentially," new CEO Anant Gupta said in the press release, adding, "six large transformational deals have once again given us a billion dollar booking quarter." The company’s revenues from the European and American markets rose 4.2 percent and 3.4 percent respectively. The company reported a volume growth of 3.0 percent sequentially. After Infosys (earnings) and TCS (Q3 results), HCL Tech is the third frontline company to have exceeded market expectations on earnings, raising hopes that the sector in general is due for a re-rating. The company added 3,291 employees at the gross level, but lost 395 employees at the net level. The company announced a dividend of Rs 2 per share, the fortieth consecutive quarter of dividends. At 9:40 hrs, HCL Tech was up 3.8 percent at Rs 699.05 on NSE.