HCL Tech Q2 net profit up 6.9 pc to Rs 2,711 cr, announces bonus shares

IT major HCL Technologies on Wednesday posted a 6.9 per cent rise in its consolidated net profit to Rs 2,711 crore for the September 2019 quarter, and raised its revenue growth forecast to 15-17 per cent for 2019-20 on the back of strong deal pipeline.

The company, which had registered a net profit of Rs 2,534 crore in the year-ago period as per the Indian Accounting Standards (IndAS), has also announced a bonus share scheme, under which it will offer one bonus share for each share held.

HCL Tech's revenue from operations grew 18 per cent to Rs 17,527 crore in the quarter under review, from Rs 14,860 crore in the year-ago period.

In dollar terms, the net profit grew 5.5 per cent to USD 376.2 million for the September 2019 quarter, while revenue surged 18.4 per cent to USD 2.48 billion as compared to the year-ago period, as per the US Generally Accepted Accounting Principles (GAAP).

On a constant currency basis, the revenue grew 20.5 per cent year-on-year and 6 per cent sequentially.

For the full fiscal, HCL Tech has raised its revenue growth outlook to 15-17 per cent for 2019-20 from its previous forecast of 14-16 per cent topline growth in constant currency terms.

"This quarter, we have delivered an outstanding performance once again. Revenue growth came in at 20.5 per cent y-o-y on a constant currency basis. Our growth - organic and as well as total growth - both are at top-end from an industry perspective," HCL Technologies President and Chief Executive Officer C Vijayakumar told reporters here.

He added that the company had launched its HCL Software business unit in the just-ended quarter and the segment had registered "extremely monumental" performance.

"In the first quarter, we delivered close to USD 100 million revenues in our product business. We have started on a strong foundation and this will continue to grow in the subsequent quarters," he added.

In December last year, HCL Technologies had inked an agreement to acquire select IBM software products for Rs 12,252 crore (about USD 1.8 billion), including earnouts of Rs 1,035 crore (USD 150 million). The company closed the deal on June 30, 2019.

This now is a part of the HCL Software business and driving organic growth for the company.

Vijayakumar said the company had guided for a 14-16 per cent growth at the beginning of the fiscal.

"Last quarter, we said organic growth is increasing to 8-10 per cent, now it is growing to 10-11 per cent... I think we are in a good winning momentum in the market. We are in top gear and our portfolio has become much richer, our access to client base has increased significantly, our geographic presence has increased and all of that is helping fuel momentum," he said.

Vijayakumar said the demand continues to be strong in Europe and North America. "HCL signed 15 transformational deals in Q2 led by IT and Business Services across verticals...the deal pipeline continues to be strong," he added.

In dollar terms, the net profit grew 5.5 per cent to USD 376.2 million for the September 2019 quarter, while revenue surged 18.4 per cent to USD 2.48 billion as compared to the year-ago period, as per the US Generally Accepted Accounting Principles (GAAP).

HCL Tech's performance in the September quarter continues to be better than that of rival Wipro that clocked a 2.5 per cent rise in its IT services segment revenue (USD 2.04 billion) in the same quarter.

Larger rivals Tata Consultancy Services and Infosys logged a revenue growth of 5.8 per cent (to Rs 38,977 crore) and 9.8 per cent (to Rs 22,629 crore), respectively, in the September quarter.

HCL Technologies' board has declared a dividend of Rs 2 per share. It has also announced a bonus share offer and the proposal is subject to approval of shareholders and regulatory nods.

The company added 13,430 people (gross) and 3,223 staff (net) during the quarter to take its total head count to 1,47,123 at the end of the September 2019 quarter. Attrition on the past 12-month basis stood at 16.9 per cent.

It has rolled out wage hikes to the tune of 6-7 per cent for offshore employees, and 2-3.5 per cent for onsite staff. It has also added 5,000 graduates in the first six months of the financial year.

The results were announced after trading hours.

Shares of the company on Wednesday closed at Rs 1,095.65 apiece, up 2.93 per cent from its previous close on the BSE.

The IT major has also appointed Shikhar Malhotra as a non-executive non-independent director on its board.

Currently, Malhotra, who is the son-in-law of HCL founder and Chairman Shiv Nadar, is the executive director and board member of HCL Corporation. With the addition of Malhotra, the company's total board strength has increased to 11 directors, including eight independent directors and three non-independent directors, a statement said.