HCL Tech Q3 Net up 3.6%; margins hit by currency fluctuations

Country's fourth largest IT services firm HCL Technologies today reported a 3.6 per cent rise in third quarter's consolidated net profit at Rs 1,683 crore, while margins were impacted due to currency volatility.
The Noida-based firm, which follows July-June fiscal, had posted a net profit of Rs 1,624 crore in the year-ago period.
The company's consolidated revenue for the reported quarter rose 11 per cent at Rs 9,267 crore from Rs 8,349 crore in the corresponding period a year ago.
However, on a sequential basis, the net profit of the IT major declined by 12.2 per cent from Rs 1,915 crore in Q2 FY2014-15, while revenue dipped 0.2 per cent from Rs 9,283 crore as its margins dropped on account of currency volatility and a stronger US dollar.

Reacting to the performance, shares of HCL Technologies tanked nearly 10 per cent as the earnings came in below market expectations. The scrip plunged 9.64 per cent to Rs 834.10 at the BSE and slipped 9.65 per cent to Rs 835.10 on the NSE.
At 1248 hours, the stock was trading at Rs 889, down 3.7 per cent on the BSE.

During the quarter, HCL Technologies reported a foreign exchange loss of Rs 142 crore as against a forex gain of Rs 15 crore in the previous quarter, which also adversely impacted the net profit. The currency impact on the revenues was about 270 basis points or 2.7 per cent.

It also invested on setting up co-innovation labs to focus on "growth, differentiation and competitive edge".
"HCL continues to deliver broad-based growth across geographies, verticals and horizontals. This quarter saw our revenue increase by 14.4 per cent (last 12 months year-on-year) in constant currency.
"We had transformational deal bookings in excess of USD 1 billion," HCL Technologies President and CEO Anant Gupta said.
These engagements were primarily driven from industries like consumer services, manufacturing and public services and the European region, he added.
"We have seen our margins to be in the 21-22 per cent range and we have delivered on those lines. We expect it to continue on similar lines," Gupta said.

The company has announced a dividend of Rs 4 per equity share. Its cash and cash equivalents stood at Rs 838 crore at the end of March 31, 2015.
"Operating margin metrics and enhanced working capital requirements have impacted our cash flows and are an outcome of our focused investment agenda for enhancing capability build up and delivery dynamics of large engagements," HCL Technologies CFO Anil Chanana said.
During the quarter, HCL Technologies added 11,041 people (gross) and 3,944 (net), taking its total headcount to 1,04,184 as on March 31, 2015.
HCL has signed 14 transformational engagements during this quarter adding up to more than USD 1 billion of total contract value, led by consumer services, manufacturing and public services verticals.