HCL Tech Q2 net up at Rs 1,920 cr; sees strong pipeline ahead

New Delhi: Software services major HCL Technologies on  posted 0.2 percent rise in consolidated net profit to Rs 1,920 crore for the December quarter, impacted by investments made on new generation technologies.

The company, which follows July-June fiscal year, had posted a net profit of Rs 1,915 crore in the year-ago period. It saw a growth of 11.4 percent in revenue at Rs 10,341 crore in the said quarter from Rs 9,283 crore a year ago.

"We have seen broad-based growth across sectors and business lines. Our investments and focus on BEYONDigital, Next Gen ITO and IoT WoRKS are enabling us to stay ahead of the curve and achieve a healthy business growth and financial performance," HCL Technologies President and CEO Anant Gupta told reporters.

He added that the company has signed 8 transformational engagements during this quarter with more than USD one billion of total contract value (TCV). In dollar terms, the company's net profit declined 5.4 percent to USD 290.8 million in the reported quarter, while revenues grew 5.1 percent to USD 1.56 billion.

Reacting to the results, HCL Technologies' scrip was trading lower by 1.13 percent at Rs 833.80 apiece. "HCLT's results were lower than expectations. Margins continue to reflect profitability challenges faced by HCLT in a bid to sustain high growth. SG&A spends at about 13% do not provide much room for further downsides," Kotak Securities Senior Vice-President and Head Private Client Group Research Dipen Shah said.

Anil Chanana, CFO at HCL Technologies, said the firm's performance in the quarter continues to reflect the return from the investments that it has been making. "The return on equity for calendar 2015 at 29 percent has been amongst the best in the industry... We saw a 60 basis point expansion in margins," he added.

In October last year, the company had said it has invested about Rs 1,300 crore towards setting up development and collaboration centres globally, hiring senior talent and on new technologies like IoT (Internet of Things) and cloud. The company is also expanding its presence in China to cater to its clients that have a manufacturing presence in the country. Gupta said the second half of the year continues to look good in terms of deal, especially re-bids. Citing analyst reports, the company said an estimated USD 50 billion TCV worth of deals could come up for re-bidding in 2016-17.

On the impact of Chennai floods, Chanana declined to share specific details. "We managed the situation well with the business continuity and disaster management kicking in. We were able to keep the impact at a minimal," he said adding that it has about 30,000 employees in Chennai.