BackHCL profit rises 54% on new deals and demand in US, Europe
Profit rises to Rs1,834 crore from Rs1,193 crore a year earlier, beating analyst estimates, on a 21% increase in net sales
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New Delhi: HCL Technologies Ltd’s June quarter net profit rose 54%, beating analyst estimates, as India’s fourth-largest software services exporter won significant new deals and benefited from higher demand in the US and Europe.
Profit rose to ₹ 1,834 crore in the quarter from ₹ 1,193 crore a year earlier on a 21% increase in net sales to ₹ 8,424 crore, HCL Technologies said on Thursday. In dollar terms, net income was $305 million on revenue of $1.4 billion.
The company had been expected to post a net profit of ₹ 1,611.7 crore on net sales of ₹ 8,452.8 crore, based on the median estimate of analysts surveyed by Bloomberg. In dollar terms, the company had been expected to earn net income of $268.209 million on revenue of $1.407 billion.
“The last quarter has been lukewarm for the industry at large, but HCL Technologies has done well in Europe and other key verticals like public services and financial services," said Sanchit Vir Gogia, chief analyst and chief executive officer, Greyhound Research.
Revenue from the Americas, HCL’s largest market, rose 12% in the quarter while sales in Europe, where the company’s clients include a British government agency and a Swiss pharmaceutical firm, rose 25%.
In a filing to the BSE, HCL Technologies said total contract value had exceeded $5 billion in the year ended June. Consolidated profit for the year to 30 June was $1.03 billion on revenue of $5.3 billion. The company announced dividend of ₹ 12 per share.
Some industry experts cautioned that slower growth in infrastructure management services, which contributed 34.5% of total revenue, may be a cause of concern for investors.
Still, HCL’s robust deal pipeline offers investors a degree of comfort.
“The deal intake is high so revenue predictability and visibility remain high," said Kuldeep Koul, research analyst at ICICI Securities.
“The other good thing is the company is broad-basing deal intake from infrastructure management services to customer applications and business processes."
India’s top three information technology (IT) services firms have posted mixed results.
Earlier this month, No. 1 Tata Consultancy Services Ltd (TCS) reported a 45% rise in net profit to ₹ 5,568 crore in the June quarter on revenue of ₹ 22,111 crore. Infosys Ltd posted a 15% rise in net profit to ₹ 2,886 crore on revenue of ₹ 12,770 crore; Wipro Ltd, India’s third largest IT services firm, said profit rose 30% rise to ₹ 2,103 crore on ₹ 11,136 crore of revenue.
“We have had a fantastic year in terms of booking across the board and we see that translate into revenues," said Anant Gupta, chief executive, HCL Technologies. “There is a churn going on in a market place. Large customers are re-looking at their portfolio of suppliers as they enter into relationships for next three-five years. It gives us a great opportunity to participate in that churn."
Shares of HCL Technologies fell 2.66% to ₹ 1,554.90 on a day the BSE’s benchmark Sensex fell 0.74% to 25,894.97points.
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