Business Standard

HCL Tech Q3 net profit up 19%; says confident of meeting revenue guidance


Press Trust of India New Delhi
Software services major HCL Technologies Tuesday posted a 19 per cent rise in consolidated net profit at Rs 2,611 crore during the December 2018 quarter and expressed confidence in meeting the higher end of its 9.5-11.5 per cent revenue growth guidance for FY2019.
The Noida-based company had registered a net profit of Rs 2,194 crore in the year-ago period. Its revenue grew 22.6 per cent to Rs 15,699 crore in the said quarter from Rs 12,808 crore in the year-ago period, beating street expectations.
"Combined Mode 2 (digital) and Mode 3 (IP-led) revenues stands at 29 per cent of our overall revenues. Our Mode 1 (core) business continues to show steady growth...The growth momentum was possible due to flawless execution of our large transformational deals," HCL Technologies President and CEO C Vijayakumar told reporters here.
He added that the US and Europe businesses grew 12.9 per cent and 14.5 per cent year-on-year, while Rest of the World (RoW) expanded 12.1 per cent (excluding India business).
While HCL Technologies maintained its topline growth guidance of 9.5-11.5 per cent (in constant currency basis), he added that the company would close the fiscal at the high-end of the forecast.
"With the confidence in the booking we have had and the demand environment, we feel confident of delivering towards the higher end of our guidance. Last quarter we had said we will come around the mid-point of the guided range, but given the outstanding performance this quarter, we are guiding towards the higher end of guided range," he said.
The results were announced after the close of trading hours. HCL Technologies' stocks closed at Rs 988.10 apiece, up 1.24 per cent from the previous close on the BSE.
"HCL Tech delivered impressive revenues growth for the quarter with 5.9 per cent constant currency growth...Net profit beat led by strong topline growth and lower tax. Strong deal signing for the quarter, 17 deals across industry verticals and geographies. Maintained revenues guidance for FY19 despite strong beat in Q3," Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas, said.
HCL Technologies said it registered its "highest booking" in the reported quarter. While Vijayakumar declined to disclose specific numbers, he said the bookings in the April-December 2018 quarter were 40 per cent higher than the comparable period last fiscal.
"We are entering 2019 with a healthy growth outlook... HCL continues its strong deal win momentum, signing 17 transformational deals this quarter, which are a mix of Mode 1 (core) and Mode 2 (digital) services across all our service lines," he said adding that Mode 2 services business has now crossed USD 1.5 billion annual run rate.
Vijayakumar said the company has invested in building global delivery centres outside India that positions HCL Technologies in a strong position.
"We, today, have 134 delivery centres outside India... We have also had highest localisation rates (65.6 per cent) across the industry, this also helps us to deal with the fluctuating demand and supply scenarios that arise due to economic and other geo political constraints," he added.
In dollar terms, HCL Technologies' net profit rose 7 per cent per cent to USD 364 million for October-December 2018 quarter, while revenue was higher by 10.8 per cent at USD 2.2 billion as compared to the year-ago period.
During the quarter, HCL Technologies added 13,191 people (gross) to take its total headcount to 1,32,328. Attrition of its IT services business on last 12 month basis was 17.8 per cent.
HCL Technologies plans to recruit about 2,000 people outside India - with the US accounting for a large chunk - in FY2019-20. In India, it plans to onboard about 10,000 fresh graduates in the coming year.
HCL Technologies' numbers come days after larger rivals Tata Consultancy Services and Infosys announced their quarterly earnings. India's second largest IT firm Infosys had reported 20.3 per cent increase to Rs 21,400 crore in its December quarter net profit, while TCS clocked 20.8 per cent rise to Rs 37,338 crore and guided towards a healthy 2019 citing a "strong" order pipeline.
Wipro's IT services revenues (that account for bulk of the topline) stood at USD 2.04 billion (around Rs 14,555 crore), up 1.8 per cent over July-September quarter, and the company expects the sales from this segment to grow 0-2 per cent in March quarter.
HCL Technologies board has declared an interim dividend of Rs 2 per share for FY19.
Asked about the impact of the shutdown in the US, Vijaykumar said the company hasn't seen any impact of the government shutdown on its business.
"Couple of areas where we are dependent on the government would be visas. We have not seen any delays at all. it is pretty much on track. The deal pipeline looks very good. So we feel positive about the coming quarter and the next year," he added.
On Brexit, he said there hasn't been any impact but the company will watch out for developments on that front.

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First Published: Jan 29 2019 | 7:01 PM IST

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