Moneycontrol Bureau
HCL Technologies' second quarter profit beat analysts' expectations on Tuesday while revenue and operational numbers matched estimates. Profit surged 11.2 percent quarter-on-quarter to Rs 1,920 crore (supported by other income) and revenue increased 2.4 percent to Rs 10,341 crore during the quarter.
Dollar revenue rose 1.39 percent sequentially to USD 1,566 million compared to USD 1,544.5 million in preceding quarter and 2.1 percent in constant currency despite Chennai floods impact.
“HCL has always been at the forefront of changing market dynamics. As a company with good corporate governance practices and robust financial performance we continue to create exceptional value, both for businesses as well as communities in which we operate," said Shiv Nadar, chairman & chief strategy officer, HCL Technologies.
The IT services provider follows July-June as its financial year.
Profit was estimated at Rs 1,795 crore on revenue of Rs 10,312 crore for the quarter. Dollar revenue was expected at USD 1,565.5 million, according to average of estimates of analysts polled by CNBC-TV18.
Earning before interest and tax (EBIT) during October-December quarter declined 0.2 percent to Rs 2,072 crore and margin contracted by 56 basis points to 20 percent compared to preceding quarter.
Other income increased 57 percent sequentially to Rs 344 crore in Q2.
"Investments and focus on BEYONDigital, Next–Gen ITO and IoT WoRKS is enabling company to stay ahead of the curve and achieve a healthy business growth and financial performance. We have achieved a revenue growth of 13.5 percent Y-o-Y in constant currency terms this calendar year," said Anant Gupta, President & CEO.HCL Technologies has booked business in excess of USD 1 billion in total contract value (TCV) in Q2, including eight transformational deals. It says number of USD 50 million dollar clients increased to 19 from 18 and number of USD 40 million dollar clients to 26 from 24 on sequential basis.
During the quarter, America's business registered revenue growth of 5.5 percent in constant currency against 0.7 percent but Europe growth was negative 2.4 percent in constant currency against 5.6 percent and Rest Of World also posted negative 3.4 percent growth in constant currency against negative 8.4 percent quarter-on-quarter.
In business verticals, application services segment grew 2 percent against 0.1 percent, infrastructure services 3.4 percent against 0.9 percent, business services growth stood at 8 percent against 2.4 percent in preceding quarter.
Its engineering & R&D services growth was negative 1.5 percent in December quarter compared to 3.6 percent in September quarter and manufacturing growth was also negative 1.3 percent against 0.5 percent in same period.
Analysts say the results are as anticipated and it is a positive that the company has been able to hold on to reasonably good margins despite slowdown in some markets.
Pankaj Sharma of Equirus Securities says that the company has been delivering good growth for many years and should come back on track once the industry dynamics improve.
"The company cannot stay insulated for long from the trends in the overall industry. So currently there is some disparity in growth rates business-wise and geography-wise," Sharma says.
Karan Taurani, IT Analyst at Dolat Capital has HCL Technologies as its top pick in the information technology space.
Abhishek Shindadkar of ICICI Direct says he awaits the company's CY16 guidance as peers have indicated a flat to negative outlook on IT budget spend for the near term.
HCL Technologies says blended utilisation for the quarter stood at 84.7 percent against 83.6 percent in previous quarter, adding attrition rate (IT services) increased to 16.7 percent from 16.3 percent in same period.
The company has declared an interim dividend of Rs 6 per share for FY16.
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