HCL Tech Q3 net up 7.8%, co maintains full-year guidance

HCL Technologies today posted a 7.8 per cent jump in net profit at Rs 2,070 crore for the December quarter, helped by growth in public services business and infrastructure services.
Revenues for the country's fourth-largest IT company were up 14.2 per cent at Rs 11,814 crore in the said quarter over the year-ago period, in line with Street expectations.
In dollar terms, the top line was higher by 11.4 per cent at USD 1.74 billion while profits grew 5.2 per cent to USD 306 million. The company has announced a dividend of Rs 6 per share.
The Noida-based firm has maintained its revenue growth outlook of 12-14 per cent for 2016-17 (based on average exchange rates for 2016-17) in constant currency.

"We continue our robust financial performance with a revenue growth of 3 per cent q-o-q and 13.8 per cent y-o-y in constant currency terms... We expect our 2016-17 revenues to be in the middle of this range," HCL Technologies President and CEO C Vijayakumar told reporters here.
The company added that the acquisitions and IP-led partnerships announced after September 30, 2016, are likely to additionally contribute 0.6-1 per cent in revenues, depending on the date of consummation of the Geometric deal.

"HCL Tech posted numbers more or less in line with expectations," Angel Broking VP Research-IT Sarabjit Kour Nangra said.

However, the company's scrip was trading marginally lower at Rs 849.50 on BSE in late afternoon trade.
The company expects 2016-17 operating margin to be in the range of 19.5-20.5 per cent post consummation of the acquisitions.
On concerns of likely stricter US visa norms, he said the company has been increasing its local hiring over the past few years and that it currently has over 55 per cent local employees in the US.
"We have been applying for less than 1,000 visas a year on an average over the past 3-4 years. It has been coming down. Our strategy has been in all the IT outsourcing deals. We re-badge a lot of people from our client and we hire people from the local geographies. So, that's why we have a very high percentage of our employees in the US who are local hires," he said.

Vijayakumar added that the company has "stepped up" efforts in the US for campus and entry-level hires to support growth expected in coming quarters.
HCL Technologies' total headcount stood at 1,11,092 at the end of December 2016, with a gross addition of 8,467 people.
About the impact of new technologies like automation and
artificial intelligence on future hiring, Vijayakumar said the headcount may grow only 5-6 per cent.
"There is going to be some optimisation due to automation... Last 4 years, our revenues have grown at about 12 per cent CAGR, but headcount has grown only 6-7 per cent, which means it's non-linear. This year, we are growing at 12-14 per cent, but headcount may grow only 5-6 per cent," he said.

He maintained that hiring will be across categories, including laterals and freshers.
HCL Technologies reported broad-based growth across all revenue segments with the Americas and Europe growing by 13.6 per cent and 17.6 per cent, respectively, year-on-year.
For the quarter to December, HCL Technologies had cash and cash equivalents of Rs 2,214.5 crore. It signed nine transformational deals this quarter across service lines, industry verticals and geographies.
"HCL Tech has a significant focus on utilities, healthcare, manufacturing and life sciences, among other verticals, that are witnessing a higher need for digital transformation and hence, higher margins," Greyhound Research V-P and Principal Analyst Anshoo Nandwaan said.

Public services grew at 24.1 per cent, retail and consumer packaged goods (CPG) at 22.7 per cent, lifesciences and healthcare at 14 per cent and financial services at 5.4 per cent on LTM y-o-y in terms of constant currency.