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HCL Tech: On Expected Lines - Views on News from Equitymaster
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HCL Tech: On Expected Lines
Mar 28, 2017

HCL Technologies announced its third quarter results for FY17. The company reported a 2.6% QoQ increase in sales and a 2.3%% QoQ increase in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated sales increased by 2.6% QoQ in 3QFY17. In constant currency terms, sales were up 3% QoQ. In US$ terms, sales were up 1.3% QoQ.
  • Operating profit was up by 4.3% QoQ. The operating margin was higher sequentially at 22.1%.
  • The other income was down by 10.3% QoQ while depreciation & amortization increased 14.8% QoQ.
  • The consolidated net profit increased by 2.3% QoQ.
  • The management declared an interim dividend of Rs 6 per share.
  • The management has announced a buyback of shares amounting to 2.5% of the company's share capital.

    Consolidated Financial performance
    (Rs m) 2QFY17 3QFY17 Change 9MFY16 9MFY17 Change
    Sales 1,15,192 1,18,142 2.6% 307,808 346,697 12.6%
    Expenditure 90,164 92,038 2.1% 2,42,403 2,70,326 11.5%
    Operating profit (EBITDA) 25,028 26,104 4.3% 65,405 76,372 16.8%
    Operating profit margin (%) 21.7% 22.1% 21.2% 22.0%
    Other income (net of finance costs) 2,063 1,850 -10.3% 7,565 5,864 -22.5%
    Forex gain/(loss) 311 434 39.7% 652 1,405 115.5%
    Depreciation & Amortization 1,826 2,096 14.8% 3,930 5,688 44.8%
    Profit before tax 25,575 26,292 2.8% 69,691 77,951 11.9%
    Tax 5,402 5,715 5.8% 13,639 16,618 21.8%
    Minority interest 17 -44 746 5
    Profit after tax/(loss) 20,156 20,620 2.3% 55,306 61,328 10.9%
    Net profit margin (%) 17.5% 17.5% 18.0% 17.7%
    No. of shares (m) 1,411.2
    Diluted earnings per share (TTM) 57.1
    P/E ratio (x)* 15.0

    *On the basis of trailing 12 months

    Segment-wise performance
    (Rs m) 2QFY17 3QFY17 Change
    Revenue by service offerings
    Application Services 43,543 44,303 1.7%
    Engineering and R&D services 20,504 21,974 7.2%
    Infrastructure Management Services 46,422 47,021 1.3%
    BPO 4,723 4,844 2.6%
    Revenue by geography
    Americas 71,304 73,130 2.6%
    Europe 33,751 34,970 3.6%
    RoW 10,137 10,042 -0.9%
    Revenue by industry vertical
    Financial services 27,761 28,709 3.4%
    Manufacturing 37,092 40,050 8.0%
    Telecom, Media & Entertainment 10,828 10,515 -2.9%
    Retail & CPG 11,980 11,105 -7.3%
    Healthcare 14,514 14,177 -2.3%
    Public Services 12,556 13,232 5.4%
    Others 461 354 -23.1%
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