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HCL Tech: Satisfactory performance - Views on News from Equitymaster

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HCL Tech: Satisfactory performance
Jan 17, 2013

HCL Technologies Ltd (HCL Tech) has announced the second quarter results (2QFY13) of financial year 2012-2013, (year ending June). The company reported a 3% quarter-on-quarter (QoQ) growth in sales and a 9% QoQ increase in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated net sales grew by 3% QoQ in 2QFY13 (The company has a June year ending).
  • The growth in revenues was 3.1% QoQ on a constant currency basis.In terms of US dollar, revenues grew by 3.6% QoQ during the quarter. Volume growth of 3% was witnessed during the quarter which was lower than the 4.4% seen during the previous quarter (1QFY13).
  • There was a continued improvement in EBITDA margin during the last quarter: EBITDA margin expanded by 0.4% QoQ to 22.6% during the quarter as compared to 22.2% seen during the previous quarter (1QFY13). That was mainly because of the 2% QoQ growth in direct costs as compared to 3% QoQ growth in net sales.
  • Net profit grew at a much higher rate of 9% QoQ, primarily because of a drop in sequential forex loss. The effective tax rate remained more or less flat during the quarter at 23.4%.
  • Net employee count declined sequentially by 395 during the quarter. That was mainly due to a net reduction of 1,323 in the head count of IT Services. Total employee base at the end of December 2012 was 85,194. Attrition in the IT services business, remained flat at 13.6% as compared to the previous quarter. However attrition in the BPO services increased from 7.5% in 1QFY13 to 8.5% in 2QFY13.
  • Added 39 new clients during the quarter. The total number of active clients at the end of December 2012 increased to 544 from 536.
  • The company has declared an interim dividend of Rs 2 per share (dividend yield of 0.3%).

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