HCL’s Q1 profits up 16%; may help fund Axon purchase

HCL’s Q1 profits up 16%; may help fund Axon purchase
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First Published: Thu, Oct 16 2008. 02 49 PM IST
Updated: Thu, Oct 16 2008. 02 49 PM IST
New Delhi: Indian computer services provider HCL Technologies Ltd, controlled by Shiv Nadar, said first quarter profit gained 16%, boosted by the rupee’s depreciation against the US dollar.
Net income rose to Rs3.56 billion ($73 million) in the three months ended 30 September from Rs3.08 billion a year earlier, the company said in a statement.
Profit was in line with the Rs3.4 billion median estimate in a Bloomberg survey of six analysts. Sales grew 39% to Rs23.7 billion.
Higher profit may help Noida-based HCL fund its planned £441 million (Rs3,727 crore) purchase of Axon Group Plc to expand consulting and software operations and compete against Tata Consultancy Services Ltd and Infosys Technologies Ltd. On Monday, the company, by way of an open market purchase, acquired 10.43% of Axon.
HCL chief executive officer Vineet Nayar is seeking acquisitions to spur growth at a time when companies are forecast to scale back on technology-related spending.
“We are facing no significant client problems,” said Nayar, discussing the global markets crisis. “We have moved 85% of the $1 billion (Rs4,840 crore) deals made last year to output-based pricing, and HCL should see a larger deal flow because of this business model.”
HCL benefited from the weaker rupee, Asia’s second worst performing currency this year, which helped increase the value of overseas sales. HCL reported a foreign exchange loss of Rs974 million, compared with a profit of Rs145 million a year earlier.
Profit in US dollars fell to $75.9 million during the quarter from $77.4 million a year ago. Sales increased to $504.7 million from $429 million.
The company used a conversion rate of Rs46.95 for every dollar in the quarter, compared with Rs39.84 a year earlier.
“It is in line with expectations. Nothing too significant, nothing too disappointing,” said Nimesh Mistry, equity analyst with Man Financials Ltd, a Mumbai brokerage firm.
On Wednesday, HCL shares closed on the Bombay Stock Exchange at Rs.158.20 a share, down 4.18%.
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Krish Raghav and K. Raghu of Mint contributed to thisstory.
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First Published: Thu, Oct 16 2008. 02 49 PM IST
More Topics: HCL | Q1 | Axon | Profit | TCS |