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HCL Tech: Large deals continue to drive gains
Apr 18, 2012

HCL Technologies Ltd (HCL Tech) has announced the third quarter results (3QFY12) of financial year 2011-2012, (year ending June). The company has reported a 0.6% quarter-on-quarter (QoQ) decline in sales and a 5.2% QoQ increase in net profits. Here is our analysis of the results.

Performance summary
  • Net sales declined marginally by 0.6% QoQ in 3QFY12 (The company has a June year ending). This was largely due to decline in core software business segment during the quarter. Revenues from the North American market also declined during the quarter. However, the company witnessed a 1.9% QoQ growth in revenues in constant currency during the quarter. For the nine month ended March 2012 (9MFY12), sales grew by 28.8% Year-on-Year (YoY).
  • Operating margins declined marginally by 0.1% QoQ to 18.4% during the quarter as compared to 18.5% seen during the previous quarter (quarter ended December 2011, 2QFY12). This was mainly due to marginally higher direct costs which offset the decline in 'Selling, General and Administrationí expenses (both as a percentage of sales). For 9MFY12, margins expanded by 1.3% YoY as compared to the same period last year.
  • Total employee count came down sequentially by 612 during the quarter. This was mainly due to a net decline of 1,031 in the head count of the BPO Services. Total employee base at the end of March 2012 was 82,464. Attrition rate came down to 15.0% as compared to 15.7% seen at the end of the previous quarter (2QFY12).
  • Net profit grew by 5.2% QoQ during the quarter. This was largely on account of higher other income and lower forex loss which offset the effects of sluggish performance at topline as well as operating level. For 9MFY12, net income increased by 39.4% YoY.
  • Added 52 new clients during the quarter. The total number of active clients at the end of March 2012 was sequentially flat at 516.
  • Proposed an interim dividend of Rs 2 per share (yield of 0.4%). Including this, total interim dividend for 9MFY12 is Rs 8 per share (yield of 1.6%).

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