HCL Tech gains after retaining revenue growth guidance for FY 2017

HCL Technologies rose 2.59% at Rs 836.40 at 10:15 IST on BSE after the company retained revenue growth guidance of 12% to 14% for the year ending 31 March 2017 in constant currency terms.

The result was announced before market hours today, 21 October 2016.

Meanwhile, the S&P BSE Sensex was down 135.88 points or 0.48% at 27,993.96.

On BSE, so far 1.15 lakh shares were traded in the counter as against average daily volume of 1.58 lakh shares in the past one quarter. The stock hit a high of Rs 848.70 and a low of Rs 822 so far during the day. The stock had hit a 52-week high of Rs 889.80 on 1 February 2016. The stock had hit a 52-week low of Rs 706.50 on 11 May 2016. The stock had outperformed the market over the past one month till 20 October 2016, rising 2.91% compared with 1.38% decline in the Sensex. The scrip had also outperformed the market in past one quarter, gaining 11.77% as against Sensex's 0.77% rise.

The large-cap company has equity capital of Rs 282.18 crore. Face value per share is Rs 2.

HCL Technologies' consolidated net profit fell 1.6% to Rs 2014 crore on 1.6% growth in revenue to Rs 11519 crore in Q2 September 2016 over Q1 June 2016. Revenue in constant currency rose 2.8% in Q2 September 2016 over Q1 June 2016. The company expects revenue growth between 12% to 14% in constant currency terms in the current financial year ending 31 March 2017 (FY 2017). This translates into 11% to 13% growth in dollar terms based on 30 September 2016 exchange rates. HCL Technologies expects its operating margin (EBIT) to be in the range of 19.5% to 20.5% for FY 2017.

HCL Technologies announced that the board of directors of the company declared an interim dividend of Rs 6 per share for FY 2017.

HCL Technologies' CFO Anil Chanana said the conversion of net income to operating cash flow has been in excess of 100% for last twelve months ended 30 September 2016 while the return on equity continues to be robust at 28%.

HCL Technologies announced that C. Vijayakumar, Chief Operating Officer of the company has been elevated to the position of the President and Chief Executive Officer of the company with effect from 20 October 2016. Anant Gupta has decided to leave the company to pursue personal interests outside of HCL.

Separately, HCL Technologies before market hours today, 21 October 2016 announced that it has entered into an agreement to acquire Butler America Aerospace, LLC (Butler Aerospace), a provider of engineering, design services and aftermarket engineering services to US Aerospace and Defense customers. Butler Aerospace is a wholly owned subsidiary of Butler America LLC. The proposed acquisition will exclude the staffing business of Butler America Inc. The consideration for the proposed transaction is $85 million to be paid in cash. The acquisition is subject to regulatory approvals including CFIUS approval in the US, along with other customary closing conditions. It is expected to be completed by 31 December 2016.

Butler Aerospace had revenues of $85.4 million for the year ended 31 December 2015 at earnings before interest and tax (EBIT) of 12.2%. The acquisition when consummated is likely to be EPS accretive, HCL Technologies said. Butler Aerospace serves customers primarily in the Aerospace and Defense industries in the US, to whom it provides engineering & design services in the areas of mechanical and structural design, electrical design, tool design and aftermarket engineering services. With over 900 highly skilled engineers and 7 design centers in the US, Butler Aerospace has a marquee list of clients in the Aerospace & Defense industries and works with OEMs and their suppliers. The acquisition will bolster HCL's capabilities in this space and access to clients with large R&D spends.

HCL Technologies is a leading global IT services company working with clients in the areas that impact and redefine the core of their businesses.

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