HCL Tech net down 20%

New Delhi-based HCL Technologies today posted a 20.5 per cent fall in net income for the second quarter ended December 31, 2009, owing to wage hikes and currency fluctuations.

Net income for the quarter was Rs 296.7 crore, compared with Rs 373.3 crore in the corresponding quarter in the previous financial year. Revenue in the quarter was up 22.8 per cent at Rs 3,032.5 crore from Rs 2,469.1 crore earlier.

Moreover, the company posted a foreign exchange loss of Rs 125.7 crore in the quarter. It also has foreign exchange hedges worth $645 million (Rs 2,978 crore) for the next nine months. Its hedging loss was $70 million (Rs 323 crore).

The wage hikes impacted the company's bottom line by 130 basis points, while currency fluctuations' impact was to the effect of 70 basis points. Sequentially, net income fell 7.3 per cent from Rs 320.1 crore in the trailing quarter, while revenue growth was flat on a quarter-on-quarter basis.

The company's stock fell 5.68 per cent to Rs 361.15 at close of Monday's trade on the Bombay Stock Exchange.

"The results were very much in line with expectations. As the company restructures the BPO business, the revenue growth is impacted by lower BPO revenues. Margins were also lower sequentially because of salary increments," Kotak Securities Senior Vice-President (Research - Private Client Group) Dipen Shah said.

HCL Technologies CEO Vineet Nayar said there were early signs of an economic recovery. "This will gain momentum by the middle of 2010. We are bullish on the way the economy is moving. We plan to become cash-positive in the next two quarters," Nayar added.

Net addition of headcount in information technology services was 1,691 — the highest that the company has added in any quarter — taking the total headcount to 55,688 by the end of December.

During the quarter, HCL won 12 new outsourcing deals, including two large deals in the financial services vertical.