HCL Q2 profit jumps 16.7 per cent to Rs 2,014 crore

HCL maintained its revenue growth guidance for 2016-17 at 12-14 per cent on constant currency basis.

By: PTI | New Delhi | Published:October 21, 2016 5:25 pm

Country’s fourth-largest IT firm HCL Technologies Friday posted 16.7 per cent jump in net profit for the September quarter and expressed optimism on growth in coming quarters amid “softness” in traditional IT spending. HCL Technologies also announced that it has elevated chief operating officer C Vijayakumar as the new CEO, following the departure of Anant Gupta, who has left the company to launch a new technology investment firm. It saw profit growing to Rs 2,014 crore in the said quarter from Rs 1,726 crore a year-ago. Revenues were up 14 per cent at Rs 11,519 crore, as per US GAAP accounting norms.

The company maintained its revenue growth guidance for 2016-17 at 12-14 per cent on constant currency basis. “I do agree that some of the traditional discretionary spends are a little bit soft, but they are being more than offset by disruptive discretionary spends. So, we remain very optimistic about our growth,” Vijayakumar said.

Its larger rivals, Tata Consultancy Services and Infosys, posted muted numbers and admitted that they were witnessing softness in the banking and financial services sector and client spending. In constant currency terms, HCL Tech’s revenues were up 12.8 per cent year-on-year. Angel Broking’s V-P Research-IT, Sarabjit Kour Nangra said the results were “more or less in line with expectations”.

Reacting to the results, the company’s scrip closed higher by 1.94 per cent at Rs 831.05 on BSE. Besides, HCL Technologies announced the acquisition of Butler America Aerospace for USD 85 million in cash. The buyout will strengthen its position in the aerospace and defence engineering services space, the company said. Terming the September quarter as a “great quarter”,
Vijayakumar said that while a lot of conversations were around “pessimism” for IT services, he remained positive about the company’s ability to be relevant for clients.

He added that the annual guidance does not factor in revenue from its recent acquisitions, including the USD 200 million takeover of Geometric, and Butler. However, on sequential basis, HCL’s net profit dipped by 1.6 per cent from the April-June quarter impacted by wage hikes.

In dollar terms, the company’s net profit grew 14.2 per cent to USD 301.2 million while revenues rose 11.5 per cent to USD 1.72 billion compared with the year-ago period. The company has announced a dividend of Rs 6 per share. During the quarter, HCL Technologies added 9,083 people (gross), taking the total headcount to 1,09,795 as on September 30, 2016. Attrition in IT services (last 12-month basis) in the reported quarter stood at 18.6 per cent.