HCL Technologies’ Profit Beats Estimates; Maintains 10-12% Dollar Revenue Guidance

HCL Technologies Ltd. reported a 2.3 percent increase in profit in the October to December quarter, beating analysts' estimates.

Net profit rose to Rs 2,062 crore from Rs 2,015 crore in the July to September quarter, according to the company's filing to the exchanges. That compares to the Rs 2,020 crore median estimate of analysts tracked by Bloomberg.

Revenue rose 2.6 percent to Rs 11,814.2 crore from Rs 11,519 crore, in line with the Rs 11,829 crore consensus estimate. In U.S. dollar terms, revenue rose 1.3 percent to $1,745 million.

Earnings before interest and tax, increased by 4 percent to Rs 2,444.2 crore. EBIT margin improved to 20.68 percent from 20.4 percent.

Guidance Unchanged

The company maintained its revenue guidance for the remaining portion of financial year 2016-17. In constant currency terms, HCL Technologies expects revenue to grow in the middle of the 12-14 percent range guided earlier, while in dollar terms, the revenue is seen growing between 10-12 percent.

The company expects its operating EBIT margins to stay in the 19.5-20.5 percent range for the fiscal year 2016-17.

HCL Technologies invested $155 million in its partnership with International Business Machines Corporation (IBM) for automation and internet of things, Nadar added in the press conference in Delhi.

Client Addition

HCL Technologies added 19 new clients in the October to December quarter.

• $5 million and above: Six new clients
• $20 million and above: Five new clients
• $50 million and above: Four new clients

While it failed to sign any new client in the $100 million plus bracket, HCL Technologies said it inked nine transformational deals, across service lines, industry verticals and geographies.

Segment-Wise Performance

• Financial service segment grew 4.5 percent quarter-on-quarter.
• Manufacturing vertical grew 8.3 percent.
• Life sciences and healthcare segment declined 2.9 percent.
• Public services segment grew 5.6 percent.
• Retail and consumer packaged goods (CPG) segment declined 6.9 percent.
• Telecommunications, media, publishing and entertainment vertical declined 3.3 percent.

Strength In Europe

• Americas segment grew 1.7 percent quarter-on-quarter.
• Europe grew 6.8 percent.
• Rest of the world declined by 0.5 percent.

Nadar Reappointed

The board also approved the re-appointment of Shiv Nadar as managing director for a period of five years starting February 1, 2017.

HCL Technologies shares dropped as much as 3 percent to Rs 831, before recovering to trade 1.7 percent lower as of 10:45 a.m.

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