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HCL Tech: Software services concerns

Apr 28, 2004

HCL Technologies announced its consolidated 3QFY04 results yesterday, reporting a topline growth of 4% sequentially. However, the company's bottomline has declined by 64% due to the one-time income of Rs 2.6 bn (on account of divestment of stake in HCL Perot) that the company had earned in the previous quarter (2QFY04). Excluding this, the profits for 3QFY04 have increased sequentially by a strong 43%. This effect has also played its part in reviving the bottomline for 9mFY04 that has grown by 165% YoY. Excluding the gain, the bottomline growth drops down to 43% YoY.

Financial performance: A snapshot
Rs m 2QFY04 3QFY04 Change 9mFY03 9mFY04 Change
Sales 6,223 6,472 4.0% 13,761 18,303 33.0%
Other Income 171 430 150.9% 307 1,095 256.6%
Expenditure 5,002 5,179 3.6% 10,751 14,811 37.8%
Operating Profit (EBDIT) 1,221 1,293 5.9% 3,010 3,493 16.0%
Operating Profit Margin (%) 19.6% 20.0%   21.9% 19.1%  
Interest - -   - -  
Depreciation 270 268 -0.8% 650 804 23.7%
Profit before Tax 1,123 1,455 29.6% 2,667 3,783 41.9%
Extraordinary items 2,633 -   (190) 2,633  
Stock-based sales incentive (30) 35   (3) (5)  
Tax 129 77 -40.3% 267 366 37.0%
Minority interest & income of equity investee (84) (155)   (45) (329)  
Profit after Tax/(Loss) 3,513 1,258 -64.2% 2,162 5,718 164.5%
Net profit margin (%) 56.5% 19.4%   15.7% 31.2%  
No. of Shares 285.4 285.4   285.4 285.4  
Diluted Earnings per share* (Rs) 49.2 17.6   10.1 26.7  
P/E Ratio (x)   16.0     10.6  
(* annualised)            

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