HCL Tech Q3 net up 29pc;books USD 1.5 bn orders in Jan-Mar qtr

HCL Tech Q3 net up 29pc;books USD 1.5 bn orders in Jan-Mar qtr

The country's fourth largest software services company HCL Technologies today reported a 28.7 per cent jump in net profit at Rs 602.5 crore for the January-March quarter, driven by strong demand from clients looking to save costs in an uncertain economic environment.

The company, which follows July-June fiscal year, had a net profit of Rs 468.2 crore in third quarter of 2010-11. Buoyed by the results, shares of the company closed 3 per cent higher at Rs 495.55 apiece from their previous close on BSE.

Though HCL Technologies remains cautious, it is also confident that a number of opportunities exist in Europe and the US which will start reflecting from October onwards.

"We have, in this quarter, done over USD 1.5 billion booking...This is the biggest ever quarter in booking terms in our history. In the last six months, we have done USD 2.5 billion worth of booking," HCL Technologies Vice Chairman and Chief Executive Officer Vineet Nayar said.

He said there were pressures both in US and Europe as IT budgets are expected to be flat or negative this year.

"In the US, companies are becoming prudent in spending. IT budgets are negative to flat and there is vendor churn as companies are looking at consolidation. In Europe, there are all kind of pressures. There are a lot of first time outsourcers and there is high emphasis on cost reduction," he added.

Indian players get about 80 per cent of their revenues from US and Europe.

HCL Technologies' revenues for the reported quarter were up 26 per cent at Rs 5,215.6 crore from Rs 4,138.2 crore in Q3 of FY'11. However, on sequential basis, revenues were down 0.6 per cent.

Nayar said he expects the October-December quarter of fiscal year 2012-13 to bring back strong growth in the sector. The company also plans to now focus more on executing the current order book rather than chasing new deals.

"Going forward, it is time to consolidate. We are going to focus on executing what we have on hand and not go for booking," he added. With the IT budgets almost flat, there is expected to be further pressure on Indian software service vendors, who are facing stiff competition from global giants like IBM and Accenture.

The country's second largest software exporter Infosys, which announced its results last week, missed its own revenue guidance for the March quarter and has provided an even worse forecast of 8-10 per cent for entire FY'13. This is lower than industry body Nasscom's estimate, which has forecast 11-14 per cent growth for the sector in FY'13.

"HCL Tech's operating results were almost in line with expectations...Its focus on the churn market has yielded results with record wins," Kotak Securities Head of Fundamental Research Dipen Shah said.

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