Q2 Results: HCL Technologies’ Profit Beats Estimates; Hikes Revenue Guidance
HCL Technologies’ net profit rose 21.6 percent sequentially to Rs 2,711 crore.
HCL Technologies Ltd.’s quarterly net profit beat estimates and the software services provider raised revenue guidance for the ongoing financial year.
Net profit rose 21.6 percent sequentially to Rs 2,711 crore in the July-September period, according to an exchange filing. That compares with the Rs 2,546 crore consensus estimate of analysts tracked by Bloomberg.
Revenue in rupee terms rose 6.7 percent over the preceding quarter to 17,527 crore—against the Rs 17,575 crore estimate. The company’s revenue was aided by the acquisition of security and digital solution providers AppScan and BigFix from IBM in July. HCL Technologies has fully recognised the revenue from the deal in the reported quarter.
The company also raised the revenue growth guidance to 15-17 percent in constant currency for the financial year ending 2020 from 14-16 percent. It, however, maintained its margin guidance at 18.5-19.5 percent for the year.
C Vijayakumar, the company’s president & chief executive officer, said business momentum was in “top gear” as it closed 15 transformational deals in the quarter and expectation of meaningful growth in the second half of the year is the reason behind increasing the revenue guidance.
Earnings before interest and tax rose 23.9 percent sequentially to Rs 3,512 crore. Operating margin widened to 20 percent from 17.3 percent in the previous quarter. That was led by a depreciation in the rupee as software exporters bill most of their global clients in U.S. dollars. The local unit depreciated 2.8 percent against the greenback during the quarter.
“This is as perfect a quarter you can have,” Prateek Aggarwal, chief financial officer, told BloombergQuint in an interview. “About three-fourths of the growth is consumerisation and integration of the [IBM] acquisition and also a 6 percent quarter-on-quarter organic growth all across the board.” There was a tax benefit of around Rs 70 crore in the current quarter due to the corporate tax rate cut, he said.
- The company issued an interim dividend of Rs 2 apiece; Nov. 1 is fixed as the record date.
- The board also approved issue of one bonus share for every one equity share held in the firm.
Shares of HCL Technologies closed 2.9 percent higher ahead of the earnings announcement compared with a 0.1 percent gain in the NSE Nifty Index.