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HCL Tech: Resilient performance delivered - Views on News from Equitymaster
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HCL Tech: Resilient performance delivered
Apr 17, 2013

HCL Technologies Ltd (HCL Tech) has announced the third quarter results (3QFY13) of financial year 2012-2013, (year ending June). The company reported a 2.4% quarter-on-quarter (QoQ) growth in sales and a 7.8% QoQ increase in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated net sales grew by 2.4% QoQ in 3QFY13 (The company has a June year ending).
  • The growth in revenues was 3.8% QoQ on a constant currency basis. In terms of US dollar, revenues grew by 3.2% QoQ during the quarter. A marginal volume growth of 0.4% was witnessed during the quarter which was lower than the 3% sequential growth seen during the previous quarter (2QFY13).
  • EBITDA margin dropped slightly from 22.6% in 2QFY13 to 22.4% in 3QFY13. That was mainly because of the 2.6% QoQ growth in direct costs as compared to 2.4% QoQ growth in net sales.
  • Net profit grew at a much higher rate of 7.8% QoQ, because of forex gains of Rs 231 m in 3QFY13 as compared to a forex loss of Rs 125 m in 2QFY13. Rise in Other Income by 135.5% also contributed to the disproportionate growth in net profit. The effective tax rate increased marginally from 23.4% in 2QFY13 to 23.8% in 3QFY13.
  • Net employee count declined sequentially by 791 during the quarter. That was mainly due to a net reduction of 1,000 in the head count of IT Services. Total employee base at the end of December 2012 was 84,403. Attrition in the IT services business increased from 13.6% in 2QFY13 to 14.2% in 3QFY13. However, attrition in the BPO services decreased from 8.7% in 2QFY13 to 7.9% in 3QFY13.
  • Added 37 new clients during the quarter. The total number of active clients at the end of March 2013 increased to 547 from 544.
  • The company has declared an interim dividend of Rs 2 per share (dividend yield of 0.3%).

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