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HCL Technologies Meets Q2 Estimates; Maintains Revenue Guidance

HCL Technologies maintained its guidance for FY18, as Q2 earnings met analyst estimates.

Ethernet plugs sit on the end of cabling ahead of installation to computer servers inside a communications room at an office in London. (Photographer: Chris Ratcliffe/Bloomberg)
Ethernet plugs sit on the end of cabling ahead of installation to computer servers inside a communications room at an office in London. (Photographer: Chris Ratcliffe/Bloomberg)

HCL Technologies Ltd. maintained its revenue guidance for the financial year 2017-18 after its quarterly earnings met analyst estimates.

India’s fourth-largest software exporter maintained sales growth guidance for the current year at 10.5-12.5 percent in terms of constant currency, it said in a stock exchange filing today. The guidance for operating margin was also maintained at 19.5-20.5 percent.

The forecast came as net profit rose to Rs 2,207 crore in the three-month period ending September, the Noida-based company said in the filing. This was slightly higher than the Rs 2,137 crore estimated by analysts tracked by Bloomberg.

Revenue rose 2.3 percent to $1,928 million on a quarter-on-quarter basis, largely in line with the $1,956 million estimated. Revenue in rupee terms rose 2.3 percent to Rs 12,434 crore in the same period. The topline was aided by its partnership with IBM. In August this year, HCL Technologies had pumped in $760 million into its intellectual property partnerships with the U.S.-based technology company.

Earnings before interest and tax fell less than a percent to Rs 2,445 crore on a sequential basis, while EBIT margin contracted by 60 basis points.

The company announced a Rs 2 per share dividend payout for the quarter.

Revenue Breakup

  • Infrastructure services, which contributes nearly 40 percent to total revenue, declined 0.2 percent quarter-on-quarter
  • Financial services segment grew 1.2 percent
  • Manufacturing segment rose 2.4 percent
  • Engineering and R&D Services grew 4.4 percent
  • Business services segment grew 2.9 percent
  • Public services vertical revenue declined 4.6 percent
  • Retail and CPG vertical also declined 0.5 percent

Client Additions And Attrition

“Our top 20 customers have grown faster than the company average, reflecting the strong performance of our Client Partner program,” said C Vijayakumar, chief executive officer and president of the company, in the media statement.

Here’s a list of the client additions made by HCL Tech during the quarter:

  • 24 new clients in the $5 million plus bracket
  • 11 new clients in the 410 million plus bracket
  • Two new clients in the $20 million plus bracket
  • Three new clients in the $40 million plus bracket
  • Five new clients in the $50 million plus bracket
  • One new client in the $100 million plus bracket

Attrition, the rate at which a company looses employees, rose to 18.6 percent from 16.2 percent sequentially on a trailing 12-month basis.