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Business News/ Companies / Company-results/  HCL Technologies profit rises 28%, beats estimates
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HCL Technologies profit rises 28%, beats estimates

Net sales rise 13% to Rs9,283 cr; net income increases 2.3%, while revenue grows by 6.3% sequentially

In dollar terms, net income stood at $308 million, a 27% increase over last year, on a revenue of $1.491 billion, which grew 13%. In constant currency terms, revenue grew 16% year on year. Photo: Pradeep Gaur/MintPremium
In dollar terms, net income stood at $308 million, a 27% increase over last year, on a revenue of $1.491 billion, which grew 13%. In constant currency terms, revenue grew 16% year on year. Photo: Pradeep Gaur/Mint

New Delhi: HCL Technologies Ltd, India’s fourth largest software exporter, on Friday beat analysts’ expectations by posting a 28% rise in net profit to 1,915 crore for the three months ended 31 December compared with a year earlier—its strongest performance in 16 quarters.

Net sales rose 13% to 9,283 crore. Sequentially, net income rose 2.3%, while revenue grew by 6.3%. In dollar terms, net income was $308 million, a 27% increase over a year ago, on revenue of $1.491 billion, which increased 13%. In constant currency terms, revenue grew 16% year-on-year.

Analysts had been expecting the company to post a consolidated net profit of $288.788 million on revenue of $1.46 billion, according to a Bloomberg poll of analysts. In rupee terms, net profit had been estimated at 1,774 crore on net sales of 8,968.2 crore.

HCL Technologies shares closed 9% higher at 1,794.10 apiece on BSE, on a day the benchmark Sensex fell 1.68% to 29,182.95 points.

Performance of HCL Technologies was led by 12.6% quarter-on-quarter growth in research and development (R&D) services and 6.3% growth in infrastructure management services (IMS), which crossed the revenue milestone of $500 milestone in the three months.

“At one time, a couple of years back, growth used to be more infrastructure-led. But half of the incremental revenues are coming from non-IMS services. So everything is growing," said Anil Chanana, chief financial officer. “We signed 15 transformational engagements this quarter which add up to more than $1 billion in revenue."

In terms of client addition, the company added one client in the $50 million plus category, two each in $40 million and $20 million brackets, in addition to six clients in $10 million bracket, 12 clients in the $5 million category and 22 clients in the $1 million category.

“Our continued focus in developing next generation propositions around digitalization, engineering platform services and target operating model for Enterprise IT have allowed us to stay ahead of the innovation curve and gain significant market share in the global IT services market", said Anant Gupta, president and chief executive officer, HCL Technologies.

“This quarter we also crossed the 100,000 employee milestone. Our ideapreneurs are creating unique value for our clients by delivering ‘relationships beyond the contract’ and continue to be our most critical differentiators."

The company took a hit of 220 basis points on account of the US dollar’s strength against the British pound and the Australian dollar. One basis point is one-hundredth of a percentage point.

Earlier this month, Tata Consultancy Services Ltd (TCS), India’s largest software services company, posted profit that trailed analyst estimates. The Mumbai-based company’s net income rose to 5,440 crore in the third quarter from 5,310 crore reported a year earlier.

Infosys Ltd, India’s second largest software services exporter, posted a 13% increase in third quarter net profit, beating analyst estimates, with its profit rising to 3,250 crore in the three months ended 31 December, from 2,875 crore a year ago.

Wipro Ltd, India’s third largest software services exporter, reported 8.8% rise in the net profit to 2,192.8 crore in December quarter from 2,014.7 crore in the year-ago quarter, marginally ahead of analyst expectations. Its revenue rose 6.7% to 12,085 crore from 11,327 crore a year earlier.

“The growth has been broad-based across infrastructure management services and software services. The company has maintained a healthy headcount exceeding 100,000," said a Mumbai-based analyst, who declined to be named since he isn’t authorized to speak to the media adding that the only “concern is its quarterly annualized attrition which remains high at 28-30%."

According to Shiv Nadar, chairman and chief strategy officer of HCL Technologies, the global information technology industry is undergoing a seismic change as the scope of IT buying expands to capture “adjacencies beyond IT."

“This is not only changing the contours of the traditional buyer as we know it but also bringing technology to the very centre stage of organizational competitiveness," Nadar said. “In such a scenario the balanced portfolio, integrated IT services and engineering capabilities of HCL have ensured that we remain service providers of choice for companies looking for business model transformation", he said.

According to Sarabjit Kour Nangra, vice-president of research for information technology at Angel Broking Ltd, HCL Technologies’ sales growth was broad-based in terms of geographies.

“Across verticals the growth was led by life sciences and health care, retail and consumer packaged goods, public services and manufacturing," she said.

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Published: 30 Jan 2015, 09:17 AM IST
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