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HCL Tech: A Flat Performance - Views on News from Equitymaster
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HCL Tech: A Flat Performance
Jun 6, 2016

HCL Technologies announced its thirdquarter results for FY16. The company has changed its financial year end to March). The company reported a 3.5% QoQ increase in sales and a 0.3% QoQ rise in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated sales increased by 3.5% QoQ in 3QFY16. In constant currency terms, sales were up 1.3% QoQ.
  • Operating profits were up by 6.9% QoQ. The operating margin improved to 22.2% in 3QFY16 as compared to 21.5% 2QFY16. This was due to good overall control over operating costs in the quarter.
  • The other income was downby 42.7% QoQ while depreciation & amortization increased 2.6% QoQ.
  • The consolidated net profit increased by 0.3% QoQ. The bottomline performance was impacted due to the fall in the other income.

    Consolidated Financial performance
    (Rs m) 2QFY16 3QFY16 Change 9MFY15 9MFY16 Change
    Sales 103,410 106,980 3.5% 272,850 307,808 12.8%
    Expenditure 81,160 83,190 2.5% 206,830 242,403 17.2%
    Operating profit (EBITDA) 22,250 23,790 6.9% 66,020 65,405 -0.9%
    Operating profit margin (%) 21.5% 22.2% 24.2% 21.2%
    Other income (net of finance costs) 3,440 1,970 -42.7% 7,560 7,565 0.1%
    Forex gain/(loss) 110 30 -72.7% -560 652
    Depreciation & Amortization 1,530 1,570 2.6% 3,260 3,930 20.5%
    Profit before tax 24,270 24,220 -0.2% 69,760 69,691 -0.1%
    Tax 5,080 4,970 -2.2% 15,020 13,639 -9.2%
    Minority interest - - 22 746
    Profit after tax/(loss) 19,190 19,250 0.3% 54,718 55,306 1.1%
    Net profit margin (%) 18.6% 18.0% 20.1% 18.0%
    No. of shares (m) 1,410.4
    Diluted earnings per share (TTM) 51.2
    P/E ratio (x)* 14.1

    *On the basis of trailing 12 month; # Financial year ends June

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