Bengaluru: Noida-based HCL Technologies Ltd on Thursday reported a 12.3% sequential growth in net profit at Rs2,325 crore in the quarter ending March, as it added more clients in the quarter and focused on growth areas like digital, cloud, security and internet of things (IoT). HCL revenue was at Rs12,053 crore, up 2% quarter-on-quarter and 12.7% year-on-year.
Revenues from Mode 2 and Mode 3 offerings (which focus on new growth areas like digital, cloud, security and IoT) together grew 30.9% in the 12-month period ending March. The share of Mode 2 and Mode 3 revenues together stands at 18.6% for FY17, compared to 15.9% for the corresponding period last year.
There was broad-based growth across verticals driven by public services at 31.3%, retail and consumer packaged goods at 21.4%, lifesciences and healthcare at 11.1%, manufacturing at 17.0%, telecommunications, media, publishing and entertainment at 5.8%, and financial services at 4.9% (on constant currency basis).
The company expects FY18 revenues to grow between 10.5% and 12.5% in constant currency. This constant currency guidance translates to 9.9% to 11.9% in dollar terms based on 31 March rates. Operating margin (earnings before interest and tax) for FY18 is expected to be in the range from 19.5% to 20.5%.
“We are glad about the overall Fiscal 2017 and the quarter performance. Our Cash Flow generation during the year continues to be robust with Net Income to Operating Cash Flow conversion at 112%. Our focus on rewarding shareholders continues with the announcement of INR 3,500 Crore Buy-back program. Return on Equity continues to be healthy at 27% for the year,” said Anil Chanana, CFO, HCL Technologies.
When asked if HCL Tech would see layoffs like in some of its peers, C. Vijayakumar, president & chief executive officer, HCL Technologies Ltd said: “We are on a positive trajectory and are focussed on hiring and reskilling our employees. I don’t expect any layoffs. We operate in a lean model.”
Analysts are concerned that amidst rising protectionism, Indian IT services providers are already experiencing tepid growth and uncertainty. However, the management said 55% of HCL’s workforce in the US are local Americans and this number is likely to only improve. “So, HCL has a low dependence on H1B visas and we are better prepared to handle it,” Vijayakumar said in a telephonic interview. He also said that as a geography, HCL was committed to investing in the country. 12 of the 41 global delivery centres are in the US, and there are also plans to launch a cyber security fusion centre.