HCL net spurts by 108% for June quarter
HCL Technologies, the country’s fifth largest software services firm, posted consolidated net profit of Rs.486.7 crore, up 108.9% year-on-year and 46.7% higher on a sequential basis, on the back of new deals and forex gains due to hedging. Consolidated revenue for for the quarter at Rs.1612 crore was up 28.6% year-on-year and 2.2% sequentially.
The company announced a final dividend of 100% for the quarter ended June 2007, taking the total dividend payout in the year to 400%. During the quarter, profit and profitability at the operating level suffered a sequential decline, following appreciating rupee and marginal rise in expenses.
Operating profit dropped by 5.3% to Rs.347.4 crore, while operating margin contracted by 170 basis points (bps) sequentially to 21.6%. Earnings before interest and tax (EBIT) fell by 7.6% to Rs.278.1 crore. However its performance on revenue and profitability fonts was marginally better than its bigger peers including TCS, Infosys and Wipro.
The company reported a huge Forex gain of Rs.250.6 crore during the quarter as a fallout of its strategy to hedge a larger portion of its revenue. It further has a hedging position of $1.1 billion to cover revenue for next six quarters. The company’s BPO business continues to be more profitable than its consolidated IT services segment. The former generated EBITDA margin of 25.7% and EBIT margin of 19.1% during the quarter. This compares with 20.9% and 17% margins for the IT services business in that order. The company earns 13.6% of its revenue from BPO solutions.
HCL Technologies further strengthened its presence in the finance vertical as its proportion of revenue rose from 27.5% to 28.7% on a quarter-on-quarter basis. It was 23.6% a year ago. Proportionate revenue from manufacturing and retail verticals dropped on a year-on-year basis. The company added seven new clients during the quarter, taking the count of active clients to 242 from 219 a year ago. Numbers of multiservice clients rose from 40 to 53.
For the year ended June 2007, consolidated net profit stood at Rs.1354.9 crore, up 75.1% against the previous fiscal. HCL Technologies‘ revenue mix continues to be characterises by high client concentration. Its top five clients contributed just over 28% to the total revenue.
