Five takeaways from HCL Tech numbers

HCL Tech has posted the best set of numbers compared with Infosys and TCS

HCL Technologies is the third of the top four IT companies that has announced its numbers. The company in its March 2014 quarter has posted a net profit of Rs 1,624 crore, up 8.5 per cent sequentially, which is by far the best profit growth among the top three companies. HCL Technologies has also convincingly beaten analyst expectation of Rs 1,551 crore.

Following are the five takeaways from HCL Technologies numbers:

1. Apart from higher profit growth HCL Technologies has posted the strongest revenue growth among the three. At 3 per cent sequential revenue growth in dollar terms and 2 per cent in rupee terms, its growth is much higher than 0.38 per cent of Infosys and 1.9 per cent of TCS.
2. More importantly the growth has come without sacrificing margins, as was the case with TCS.  For the tenth straight quarter the company has improved its margin. Its earnings before interest and tax (EBIT) has improved by 100 basis points over previous quarter to 24.7 per cent. Analysts expected it at 23 per cent level.
3. As was the case with TCS, HCL Tech too posted string numbers from Europe. The region gave a 4.8 per cent growth to HCL Tech while growth in US was to the tune of 0.4 per cent on a sequential basis.
4. HCL Tech is catching up with the top IT players in the country by taking bigger orders. During the quarter the company signed over $1 billion of transformational engagements. It added two clients in $50 million category and increased the number of clients in the $100 million category to six from five.
5. The company also has one of the best employee utilisation rates among the top players at 84.2 per cent compared to 78 per cent for the others. However, as in the case of Infosys its attrition rate has increased to 16.9 per cent during the quarter as compared to 14.2 per cent in the same quarter last year.