HCL Tech

The market was not too happy with the performance of HCL Tech.  For its first quarter period ended 30th Sept 16 (year ending 30th June), it posted a 3% (QoQ) decline in consolidated net profit at Rs.1726 crore while topline was up 3% at Rs.10,097 crore. Dollar revenue was almost status quo, showing less than 1% rise at $1545 million. It is not like as though these muted numbers came as a total surprise – the company had forewarned in September that revenue could be muted, blaming it on adverse currency fluctuations and other factors.

But on the EBIT front, the company did well. During the quarter EBIT was up 11% at Rs.2076 crore while margin rose 36 bps to 20.56%. And after considering its US$18 million provisions, adjusted EBIT margin stood at 19.4%.  In terms of geographical breakup, unlike for other IT companies where Americas led the growth, at HCL Tech, it was Europe which showed a 6% jump in growth and Americas was flat at 0.7%. Rest of World showed an over 8% decline. In terms of verticals, the growth engine was led by Engineering and R&D services, which showed a 4% rise. Close on its heels was business services, up 2.4% while infra services came in flat at 0.9%. Application service was almost status quo. Attrition during the quarter actually came down from 16.5% to 16.3% (QoQ). H2 as such seasonally is weaker than H1 and the current two quarters are expected to be tepid, especially the present one for IT companies.