Mumbai, April 18: Shiv Nadar-controlled HCL Technologies beat Street expectations by posting a 28.7 per cent increase in net profit at Rs 603 crore in the third quarter ended March 31.
Revenues rose 26 per cent to Rs 5,216 crore.
The result surprised the markets especially as they were announced soon after IT bellwether Infosys missed its fourth-quarter guidance and voiced concerns over new orders in the next six months. The HCL scrip surged 6 per cent in the morning trade and settled 3.06 per cent higher at Rs 495.55 on the BSE.
Even though the results pleased investors, HCL is not immune to the possibility of slackening demand in the coming months. Managing director Vineet Nayyar warned that while US firms had reported higher profits of 20 per cent than their pre-recession peak, businesses were hesitant to commit spending over the next two quarters. HCL will now focus on executing orders worth $2.5 billion that it got over the past six months, he said. Of these, orders worth $2.5 billion, or over 80 per cent, are from Fortune 2000 firms.
Chairman and chief strategy officer Shiv Nadar said, “A key strategic shift in the global IT Industry has been the levelling of the playing field between the Indian origin service providers and the global MNCs. It is encouraging to note that HCL has continued its growth trajectory even in this environment thanks to our globally competitive business model, which is emerging as an attractive alternative to enterprises worldwide”.
Brokerages were impressed with HCL’s performance but were equally cognizant of a weakening demand especially in key verticals such as financial services. “There are concerns like degrowth in banking financial services and insurance (4.1 per cent) and the US geography (1.1 per cent) in constant currency terms. Even the employee strength has reduced quarter on quarter. The stock has run up quite a bit over the past few months and is trading at a lower discount to larger peers,” Dipen Shah, Kotak Securities head of fundamental research, said.
HCL won orders worth over $1.5 billion (excluding contract renewals) in large multi-year transformation deals across 14 customers this quarter with over $1.3 billion with Fortune500/Global2000 organisations.