HCL net income rises 57% in third quarter

Hiring up this year, pay rise planned in July.

Reduced foreign exchange losses and growth in industry sectors like manufacturing, financial services, life sciences and media, publishing and entertainment, made Delhi-based HCL Technologies post a 57.7 per cent increase in net income for the third quarter ended March 31.

Net income for the information technology (IT) giant in the quarter was Rs 344 crore, compared with Rs 218.1 crore in the corresponding quarter a year earlier. Revenue for the quarter, at Rs 3,075.7 crore, was up 7.5 per cent compared with Rs 2,861.5 crore in the year-ago period.

Foreign exchange loss for the period was Rs 62.6 crore and the company generated $250 million (Rs 1,125 crore) of cash in the first nine months of the year. Its net debt is $104 million (around Rs 470 crore). In the trailing quarter, the foreign exchange loss was Rs 125.7 crore.

“Net profits were higher than estimates because of reduced depreciation costs and lower-than-expected forex loss,” said Dipen Shah, senior vice- president, PCG Research, Kotak Securities.

Buoyed by the results, the HCL stock closed at Rs 374.10, up 8.3 per cent on the Bombay Stock Exchange’s Sensex. On a sequential basis, net income rose 15.9 per cent from Rs 296.7 crore registered in the trailing quarter, while revenue increased marginally, by 1.4 per cent, from Rs 3,032.5 crore in the previous quarter ended December 31, 2009.

“We have been able to expand our operating margins in IT services by 130 basis points year-on-year and 40 bps quarter-on-quarter, in spite of a difficult global currency market,” said Anil Chanana, chief financial officer.

“The results definitely reiterate that the last two quarters have seen significant new deal activity for the larger ITeS (It-enabled services) players. The closure of new deals shows that IT spending is back in the market. HCL definitely benefited on the forex front, which is reflected in its bottom line,” added Karthik Ananth, director-market expansion, Zinnov Management Consulting.

HCL Technologies plans to hire 5,000 fresh entrants in 2010, compared with the 2,000 it had hired in calendar year 2009. In the quarter under consideration, the gross employee addition was 7,136, taking the headcount to 58,129. The quarterly attrition for IT services was 14 per cent, compared with 12.5 per cent in the previous quarter. The company also plans go for a wage hike in July this year, the beginning of its financial year.