HCL Tech Q2 net profit grows 16.7%; eight takeaways for investors
October 21, 2016
IT services firm HCL Technologies on Friday reported a 16.7 per cent increase in net profit at Rs 2,014 crore in the September quarter of financial year 2016.
The Noida-based firm had posted a net profit of Rs 1,726 crore in the corresponding quarter of the last fiscal, HCL Technologies said in a statement.
Reacting to the better-than-expected quarterly performance, HCL Tech stock rallied as much as 4.10 per cent on the BSE.
"HCL continues to be the partner of choice for the 21 Century Enterprise through our differentiated strategy encompassing core services, integrated next generation offerings and platforms, in line with our Mode 1-2-3 growth strategy," HCL Technologies President and CEO C Vijayakumar said.
This has helped deliver a strong growth of 2.8 per cent quarter-on-quarter and 12.8 per cent on-year this quarter in constant currency on the back of strong first quarter (of 2016-17) performance in constant currency, he added.
Below are 8 takeaways from HCL Tech's September quarter numbers:
- Revenues: Revenues for the reported quarter were up 14.1 per cent to Rs 11,519 crore, from Rs 10,097 crore in the year-ago period. However, on a sequential basis, revenue grew 1.6 per cent from Rs 11,336 crore. In constant currency terms, revenues were up 12.8 per cent year-on-year, while 11.5 per cent YoY in dollar terms.
- FY17 guidance: The company maintained its revenue growth guidance for 2016-17 at 12-14 per cent on constant currency basis. The expected operating margin (EBIT) range for FY17 is from 19.5 per cent to 20.5 per cent.
- Growth in key verticals: Broad based growth across verticals driven by public services grew at 25 per cent, retail & CPG at 21.6 per cent, lifesciences & healthcare at 15.9 per cent, telecommunications, media, publishing & entertainment at 14.9 per cent, manufacturing at 7.1 per cent, and financial services at 5.3 per cent (LTM YoY on Constant Currency basis).
- Dividend: HCL Technologies has declared an interim dividend of Rs 6 per equity share of Rs 2 each of the company for the financial year 2016-17. The Payment date of the said interim dividend shall be November 7, 2016.
- Management change: IT services major's Chief Executive Officer Anant Gupta has put in his papers, following which the company has elevated current Chief Operating Officer C Vijayakumar to the post with immediate effect.
- Employee addition & attrition: 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.
- Acquisitions: HCL has entered into an agreement to acquire Butler America Aerospace, LLC (Butler Aerospace), a provider of engineering and design services to US Aerospace and Defense customers. The proposed acquisition will exclude the staffing business of Butler America Inc. Butler Aerospace serves customers primarily in the Aerospace and Defense industries in the US, to whom it provides Engineering & Design services in the areas of Mechanical and Structural Design, Electrical Design, Tool design and aftermarket engineering services.
- Deals: 12 transformational deals were signed this quarter. These deals were led by the geographies of Americas and Europe, spanning across service lines and verticals of manufacturing, life-sciences & healthcare, consumer services, financial services and energy & utilities.