HCL Tech Q3 net spurts 14.4 pc, sees softness in fin services

The country's fourth-largest IT services firm HCL Technologies today posted a 14.4 per cent rise in net profit at Rs 1,926 crore for the March quarter, helped by growth in lifesciences, public services and telecom.
The Noida-based firm, which booked deals worth over USD 2 billion this quarter, saw revenues growing 15.4 per cent to Rs 10,698 crore, from Rs 9,267 crore in January-March of 2015.
The company follows the July-June fiscal, but will now move to April-March to comply with changes in the Companies Act, 2013.
However, HCL's net profit went up just 0.3 per cent from Rs 1,920 crore in the December 2015 quarter while revenue grew 3.4 per cent from Rs 10,341 crore.

Reacting to the results, the stock closed lower by 4.51 per cent at Rs 799.95 on BSE.
"Our investments in BEYONDigital, IoT WoRKS and Next-Gen ITO helped us close FY16 year with a robust growth of 11.6 per cent YoY in constant currency. This nine-month financial year, we signed 25 transformation deals with more than USD 4 billion of total contract value (TCV)," HCL Technologies President and CEO Anant Gupta told reporters here.

The company has significantly beefed up its strength in new-age services and domain leadership through strategic client acquisitions, he added.
It has announced a dividend of Rs 6 per share.

Gupta said financial services revenues declined 1.3 per cent, but those from lifesciences and healthcare grew 6.4 per cent, public services 7.1 per cent and telecom, media, publishing and entertainment 4.2 per cent on a quarterly basis.
"... (there are a) couple of corners of softness in banking... Typically, financial services as a percentage of the total IT spend worldwide is about 30 per cent. So, a little shift there makes a big difference," he said.
Gupta added that financial institutions are looking at meeting changing regulatory requirements and making higher usage of technologies like artificial intelligence.
"... As banks look at creating more captives, they will move work from various parts of the globe into... Low-cost centres in phase I, before they start to move out the work specifically to third parties or outsourcers," he added.

Financial services accounted for 25 per cent of the company's revenues while lifesciences and healthcare comprised 12.8 per cent, followed by public services at 11.1 per cent and telecommunications, media, publishing and entertainment at 9.9 per cent.
In dollar terms, HCL Technologies' net profit grew 5.5 per
cent to USD 285.1 million while revenue rose 6.5 per cent to USD 1.58 billion in the March quarter over a year ago.
On geographical contribution, Gupta said the revenues from the Americas and Europe continue to remain strong.
"Europe is still strong, but currency is a dampener. There are natural nuances of the markets... Western Europe and the US are similar on rebids (opportunity)," he added.

HCL Technologies is setting up a design thinking and process digitisation lab in Texas. Besides, it is establishing two delivery centres in Madurai and Lucknow.
During the quarter, HCL Technologies added 9,280 people (gross) and 1,200 (net) employees, taking the total headcount to 1,04,896 as on March 31, 2016.
Attrition in IT services increased to 17.3 per cent in the said quarter, from 16.7 per cent in the previous one.
HCL signed seven transformational deals this quarter with total contract value of over USD 2 billion. These wins were broad-based across service lines and industry verticals, led by next-generation offerings -- BEYONDigital, IoT WoRKS and Next-Gen ITO.

The company's cash and cash equivalents stood at Rs 729.3 crore at the end of March 31, 2016.
"Healthy cash generation in the last 12 months is reflected in 97 per cent of the net income getting converted to operating cash flow. We have pursued a well-balanced capital allocation strategy through a combination of capital expenditure, dividends and acquisitions," HCL Technologies CFO Anil Chanana said.