HCL Tech profit beats estimates on healthy spending from top clients

HCL Technologies today joined Infosys and TCS to report better than expected earnings for the July September quarter,signalling accelerated spending by clients.

The Noida-based company saw an 18.7 percent rise in net profitquarter-on-quarter to Rs1,416 crore. Analysts on an average were expecting HCL Tech to report an 11 percent quarterly rise in profit at Rs 1350 crore.

HCL Tech’s first quarter revenue was in line with estimates.Consolidated revenues grew 14 percent quarter-on-quarter to Rs 7,961 crore during September quarter, . A CNBC-TV18 poll estimated that the software company would report revenues of Rs 7,974 crore for the quarter.

In dollar terms,revenues has increased to $ 1270.29 million from $1113.77 million in the year-ago period.

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“Against the backdrop of encouraging macro economic trends, these results cement HCL’s position as a company with a strong and differentiated business model. HCL remains well positioned in both existing and emerging momentum markets - with exceptionally strong customer relationships driving sustainable growth,” said Shiv Nadar, Chairman & Chief Strategy Officer of HCL Technologies.

Analysts were expecting cross currency headwinds of 50-60 basis points.

In fact, the company performed exceptionally well on the margins front on account of rupee depreciation.HCL Tech’s EBIT margins were up 23.8 percent in the September quarter against 20.7 percent in the previous quarter.

HCL Tech posted a forex loss of Rs 236 crore against a gain of Rs 29 crore in the previous quarter.

The company also declared an interim dividend of Rs 2 per share.

The company also signed 6 $100 million clients during the quarter.

Total headcount for the quarter stood at 87,196, with net addition of 1,691 employees.

The company attributed strong growth in the financial services and manufacturing verticals to the robust performance.

“Infrastructure Services continued to lead with growth at 8.8 percent, followed by Business Services at 1.7 percent, Engineering and R&D Services at 1.5 percent and Application Services at 1.1 percent respectively,” the company said in its release.